Which property is NOT included in a decedent's gross estate?

In determining what is included in a decedent's gross estate, it is essential to understand the implications of gift tax exclusions and how they interact with estate taxation.

The correct answer refers to a $24,800 gift made using the spouse's annual gift tax exclusion. The annual gift tax exclusion allows individuals to give a certain amount of money to another person each year without incurring a gift tax. In this case, the gift made utilizes the annual exclusion, which means it does not reduce the decedent's estate because it was not part of their property at the time of death.

This is in contrast to assets like life insurance that is transferred within three years of death or funds held in an irrevocable trust for which the decedent has retained certain rights, both of which would be included in the gross estate due to the retained benefits or control over these assets. Similarly, funds in a qualified retirement plan with a named beneficiary would also be included as part of the estate, as they are typically considered part of the decedent's rights until death.

Understanding these distinctions is crucial for analyzing what constitutes a gross estate and the tax implications involved. Gifts made under the annual exclusion are not considered in the gross estate calculation, which is why the mentioned gift stands