In Re the Estate of Gufler

Are the proceeds of a life insurance policy-payable to a designated beneficiary, taxable under the inheritance tax statutes of this state, in so far as the proceeds are used to discharge an obligation of the insured to a creditor, to whom the insured had previously assigned the policy as collateral security?

Decedent had insured his life for thirty thousand dollars, evidenced by four policies. His wife was designated as beneficiary in two policies for twenty thousand dollars; his son was named beneficiary in two policies for ten thousand dollars.

During his lifetime, decedent borrowed money…