Is the naming of an
irrevocable beneficiary under a refund annuity a gift?
The Tax Court also has held that where the insured assigned policies, retaining the right to consent to the assignee's designating as beneficiary, or assigning the policies to, anyone who did not have an insurable interest in the insured's life, the assignee's act of designating an
irrevocable beneficiary did not eliminate the insured's retained incidents of ownership.
In fact, one of their children purchased a small whole life policy and designated the charity as the owner and
irrevocable beneficiary As a result, the annual premiums that are paid are a charitable deduction.
If the wife had named the trust as
irrevocable beneficiary, a completed gift would have been made at that time, but it would have been significantly less than the value of the proceeds.
Also, if named an
irrevocable beneficiary of the trust, the foundation can seek financing from a bank on the strength of future distributions.
Plan participants can make an
irrevocable beneficiary designation, usually an irrevocable trust for family members.
The simple use of an
irrevocable beneficiary designation will accomplish this estate tax exclusion; using an irrevocable trust named irrevocably as the beneficiary, the taxpayer can achieve a second estate bypass on the death of the surviving spouse.
For example, you may designate the Arthritis Foundation owner and
irrevocable beneficiary of a policy, meaning that you do not retain the right to change the beneficiary.
To avoid this result, the parent may want to make the policy non-transferable and non-assignable with an
irrevocable beneficiary designation upon policy issue.
Other options include naming a charity as the
irrevocable beneficiary of an existing policy or as the owner and beneficiary of a new one.
