Incidents of ownership
Certified Financial Planner glossary · Certified Financial Planner
Definition
Rights over a life insurance policy,to change the beneficiary, borrow, surrender, or assign, whose retention causes estate inclusion under Section 2042.
Incidents of ownership in plain English
An ILIT owns a policy on paper, but the insured still casually changes the beneficiary at the kitchen table. Incidents of ownership are rights over a life insurance policy (to change the beneficiary, borrow, surrender, or assign) whose retention causes estate inclusion under Section 2042. Naming the trust as owner is not enough if the insured kept control. Estate inclusion can follow the retained power, not the premium payer story alone. Hunt the stem for control verbs: change, borrow, surrender, assign.
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