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Life insurance policy and irrevocable trust

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Last year Robert transferred a life insurance policy worth $45,000 to an irrevocable trust with directions to distribute the corpus of the trust to his grandson, Danny, upon his graduation from college, or to Danny's estate upon his death. Robert paid $15,000 of gift tax on the transfer of the policy. Early this year, Robert died and the insurance company paid $400,000 to the trust.

What amount, if any, is included in Robert's gross estate?

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Solution Summary

This solution explains the amount that should be included in Robert's gross estate.

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It's a bit easier to use actual years in these problems when dealing with estate tax transfers.

In 2012, Robert transferred the policy worth $45,000 to the trust. The proceeds are to be distributed to Danny when he either graduates or to Danny's estate. ...

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