Proceeds from Life Insurance Part of Gross Estate - Taxable

May 3, 1993 BIR RULING NO. 166-93 PROCEEDS FROM LIFE INSURANCE PART OF GROSS ESTATE TAXABLE 78 (e) 000-00 166-93 Ms. Lilia T. Aaron 166 Paciano Rizal Mayapa, Calamba Laguna This refers to your letter, dated January 14, 1993 requesting for our opinion as to whether or not the life insurance proceeds which you and your daughter expect to receive due to death of your husband is taxable. cdta It is represented that your husband was insured for P300,000.00 and the original beneficiaries of which were you and your daughter; that your husband died in 1977; that to your great disbelief, your brother-in-law was able to present to the insurance company documents showing that your husband changed his beneficiaries without your prior knowledge; that a court litigation ensued because of that and the court battle has been going on for sixteen (16) years already. In reply, please be informed that pursuant to Section 78(e) of the Tax Code, as amended, proceeds of life insurance to the extent of the amount receivable by the estate of the deceased, his executor, or administrator, as insurance under policies taken out by the decedent upon his own life, irrespective of whether or not the insured retained the power of revocation or to the extent of the amount receivable by the beneficiary/designated in the policy of insurance shall form part of the gross estate subject to the estate tax, except when the decedent expressly stipulated that the designation of the beneficiary is irrevocable. In view thereof, considering that based on the facts presented, it appears that the designation of the beneficiary/ies in the subject insurance policy is revocable, the aforesaid projected insurance proceeds, which is still the subject of a court litigation shall form part of the gross estate which is subject to estate tax. cd VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue