Tax Facts

82 / If life insurance proceeds are payable to an insured’s estate, is the value of the proceeds includable in the insured’s estate?

Yes. The entire value of the proceeds must be included in the insured’s gross estate even if the insured possessed no incident of ownership in the policy, and paid none of the premiums.1 But see Q 167 and Q 168 for the rule in community property states. Proceeds payable to an executor in the executor’s individual capacity rather than as executor for the insured’s estate were not treated as payable to the insured’s estate by the Tax Court.2

1.     IRC § 2042(1); Estate of Bromley v. Commissioner, 16 BTA 1322 (1929).

2.     Estate of Friedberg v. Commissioner, TC Memo 1992-310.

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