Author Question: Charles, age 65, owns a paid-up 250,000 whole life policy on his own life. Charles is doing some ... (Read 145 times)

renzo156 · **on:** Jul 11, 2018

Charles, age 65, owns a paid-up 250,000 whole life policy on his own life. Charles is doing some estate planning and would not like this policy to be included in his gross estate for federal estate tax purposes.

Which of the following statements is (are) true regarding the tax treatment of this policy?
I. Charles can avoid having the policy proceeds included in his gross estate by naming his estate the beneficiary.
II. If Charles makes an absolute assignment of the policy and dies more than three years later, the policy is not counted as part of his gross estate.
A) I only
B) II only
C) both I and II
D) neither I nor II

Question 2

Which of the following statements is (are) true with respect to annuities? I. Annuities are the opposite of life insurance. II. The fundamental purpose of annuities is to replace lost income in case of premature death.

A) I only
B) II only
C) both I and II
D) neither I nor II