Cal. Code Regs. tit. 18 § 13724
If all the premiums on a policy of insurance issued on the life of a deceased spouse and payable to the surviving spouse have been paid from their community funds, and the decedent retained the legal incidents of ownership in the policy until death, one-half of the proceeds of the policy is excluded as community property belonging to the surviving spouse (see Revenue and Taxation Code Section 13551 as amended and effective January 1, 1976), and in addition, $50,000 of the decedent's one-half are excluded under the insurance exclusion (see Section 13723). This regulation may be illustrated by the following example:
EXAMPLE. A at his death in 1976 left a $200,000 insurance policy on his life payable to his wife, B, the premiums on which were paid from community funds, and as to which the legal incidents of ownership were retained by A until his death. B will be entitled to exclusions totalling $150,000, of which $100,000 is within the community exclusion and $50,000 within the insurance exclusion.
Cal. Code Regs. Tit. 18, § 13724
Note: Authority cited: Section 14740, Revenue and Taxation Code. Reference: Section 13724, Revenue and Taxation Code.