InstantForum.NET v4.1.4California Society of CPAshttp://forums.calcpa.org/forums@calcpa.orgWed, 16 May 2012 17:41:14 GMT20http://forums.calcpa.org/Topic227-2-1.aspxI have had clients transfer life insurance policies before. You will need to file a gift tax return. The FMV of the gift is the *interpolated terminal reserve* value which the insurance company must provide. For planning purposes, the FMV is approximately the cash value.</P><P>Before making the gift you'll need to know if there is a policy loan. If you make a gift of a policy that is subject to a loan, you'll have a taxable sale if the loan balance exceeds the basis in the policy.</P><P>Given all that, it is a fairly common occurence but the benefits evaporate if he doesn't live 3 years from the date of the transfer. Is he healthy?Fri, 06 Oct 2006 12:05:59 GMTMary Kay Fosshttp://forums.calcpa.org/Topic227-2-1.aspxI have a client that is 91 and we are trying to put his financial house in order. At spouse's death there was no 706 filed, the community assets were around $2.5M (pieced together from going through home office files). No funding of trusts, etc. Now we are playing catch-up. There are 6 life insurance policies naming daughter as bene, and 1 policy naming deceased spouse. The owner and the insured are the surviving spouse. When working with the CFP, he suggested that we change the ownership of the policies to the daughter/beneficiary, in order to remove the assets from the estate, and just hope that the 3 year look back period is reached. Is this "done all the time". Is there some kind of reporting I would do?</P><P>I will probably have many questions on the estate, trying to dig through the past. Thanks for the info.Thu, 05 Oct 2006 16:26:16 GMTLinda Williams