Tax Facts

215 / Does a taxable gift occur when a donor spouse assigns community property life insurance to a donee spouse?

Updated: October 02, 2024 at 01:53 PM
Generally, no. The assignment qualifies for the unlimited marital gift tax deduction applicable to interspousal gifts, even though the policy is community property.1 (The assignment is actually of the donor spouse’s one-half community property interest, because the donee spouse already owns the other one-half.) An annual exclusion may be allowed instead of the marital deduction if the donee spouse is a non-U.S. citizen.





1.     IRC § 2523.

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