If a decedent possessed any of the incidents of ownership of a life insurance policy, or if the policy proceeds were payable to his executor, the entire amount of the insurance proceeds is included in his estate for estate tax purposes under section 2042 of the Internal Revenue Code of 1954 (Code). However, if the decedent had transferred ownership of the policy to another person in a transaction that both met the requirements of section 2042 and was not regarded as "in contemplation of death," but continued to pay the insurance premiums until his death, it is unclear whether any of the proceeds are includible in his estate under any other provision of the Code.
Michigan Law Review,
Estate Tax--Life Insurance--Section 2035 As a Basis for Including Life Insurance Proceeds in the Gross Estate of an Insured Who Paid Premiums on a Policy Owned by Another Person,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol67/iss4/6