2.5 . Gayle is the owner and insured on a $1, 000, 000 face value life insurance policy in pay status . Gayle's adjusted basis in the life insurance contract is $250, 000 . If Gayle gifts this life insurance policy to her daughter and listed beneficiary , Celeste , which of the following statements is correct ? After the date of the gift , any dividends paid on the life insurance policy wil be taxable to Gayle . b. Celeste can amend the beneficiary designation of the life insurance policy to include her son , Matt , as a co - beneficiary . c . If Celeste dies before Gayle , Celeste's probate estate will include the replacement value of the life insurance policy . d. If Gayle dies within 3 years of the gift of the life insurance policy to Celeste , the death benefit will be included in Gayle's probate estate