Different expert here – My name is ***** ***** please allow me to provide you with information that specifically addresses your initial question.
All policies should be listed on Schedule D
of Form 706, whether or not they are includible in the gross estate for estate tax purposes. Include the same information as you would for any other policy, but do not include a value in the value column. In your description of this policy, explain why the policy is not includible.
If the decedent held any incidents of ownership in the insurance, it goes in the taxable estate. The IRS gives specific examples of the rights that count as incidents of ownership. These rights include:
The right to name and change the beneficiary;
The right to assign the policy to another or to revoke an assignment;
The right to surrender or cancel the policy;
The right to pledge the policy as collateral for a loan or to obtain a loan against the surrender value from the insurance company.
Based on the above, “the right to cancel the policy by ceasing to pay the premiums coming due thereby letting the policy lapse” would be an incident of ownership, and the policy would be included in the taxable estate.
Please let me know if you require further information or clarification.
Thank you and best regards,