Daniel purchases a cash value life insurance policy with a face amount of $2,000,000. He gives that policy to his spouse, Wendy, assigning all his rights in the policy to her. Daniel continues to pay the premiums.

a. What are the gift tax consequences? What if the policy were a term policy rather than cash value?

b. Wendy dies five years after the policy is transferred to her. What are the estate tax consequences?

c. Instead of 1.b., Daniel dies. What are the estate tax consequences if he dies two years after transferring the policy? What if it is four years later?

Answer rating: 100% (QA)

a The gift tax consequences for transferring the cash value life insurance policy to Wendy would dep... View the full answer