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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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i have current life insurance policy in force and want to ...

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i have current life insurance policy in force and want to change primary beneficiary to newly created irrevocable trust (in my name)--it has fed tax id # XXXXX a trustee (friend of family). it is a return of premium term life policy--i.e. if i don''t die by the time to policy expires, i get most of paid-in premiums back (would be approx $17K).   my question: if the new beneficiary is my irrev trust, do i have to also change the owner of the policy (currently my wife) to the irrev trust to hold up for GST purposes? i''d rather not, since if i don''t die, the ROP would be refunded to owner (my wife) tax-free. if i change owner, then ROP would go in to the bank account of the new irrev trust, and we (my wife and i) would not (i assume) be able to withdraw those funds from irrev trust bank account without tax consequences. please advise.
Submitted: 8 years ago.
Category: Tax
Expert:  MequonCPA replied 8 years ago.


If your wife is the owner of the policy, it is her policy. She alone has the right and power to make any changes. In theory, she should be making the premium payments. She does have an insurable interest in your life, and she alone can make changes in the beneficiary.

The transfer of ownership of the policy could be subject to gift tax filing.

This is usually a portion of an estate plan. Before making this type of change, it should be reviewed with your estate planners (attorney/CPA/broker/agent).

Customer: replied 8 years ago.
Reply to Steve's Post: pretty generic answer, and frankly doesn't really answer the question posed. if i have to accept, then i do not intend to use this service again. i need SPECIFIC answer. for someone with 25 years in tax business, i'd think this was straightforward.
Expert:  MequonCPA replied 8 years ago.


The straightforward answer is that your wife ,as owner of the policy, has the right to change the beneficiary of the policy to any individual or trust. It is her choice, and there are no requirements to change the ownership to do so.

The only caveat is that the change of one aspect of an estate plan cannot be made in a vacuum. Any change should be reviewed with the full plan in mind.

You are not required to accept an answer, and I will opt out to let another expert respond if you would like.

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