hard · Certified Financial Planner General Principles
The Brennan household includes an aging patriarch who owns a 2,000,000 life insurance policy on his own life and5,000,000 in Apple stock. He gifts the life insurance policy to an Irrevocable Life Insurance Trust (ILIT) and gifts the stock to his children. He dies two years later.
Which of the following is brought back into his gross estate under the 3-year lookback rule (Section 2035)?
- Only the gift tax paid on the transfers, as the policy was held in an ILIT.
- The 5,000,000 in Apple stock and the life insurance policy.
- The $2,000,000 life insurance policy and any gift tax paid on the transfers.
- Nothing is brought back because the patriarch did not retain any incidents of ownership.
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