medium · Certified Financial Planner Estate Planning
The Priest family is settling the estate of a decedent who died in 2026. The decedent made several gifts in 2025: a 1,000,000 portfolio of Apple stock to a niece, a 500,000 life insurance policy on his own life to an ILIT, and 100,000 in cash to a charity.
Which items are pulled back into the gross estate under the Section 2035 3-year lookback rule?
- All gifts made within three years of death are pulled back to prevent 'deathbed' tax avoidance.
- Only the charitable gift, as it exceeds the 2026 AGI ceiling for the decedent's final return.
- Only the life insurance policy and any gift tax paid out-of-pocket on the transfers.
- None of the items, because the decedent's total estate was below the 15,000,000 exclusion.
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