QUESTION
Do I have to pay inheritance tax if the money was from a life insurance company?
Asked on Feb 22nd, 2013 on Taxation - Delaware
More details to this question:
I inherited $23,678.35 from a life insurance policy after my mother passed away. I received the money last week. Do I have to pay taxes on it?
9 ANSWERS
In general, the proceeds from a life insurance policy are not taxable.
Answered on Feb 25th, 2013 at 9:10 PM
Tax Attorney serving Portland, OR
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Bullivant Houser Bailey PC
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Except to the extent of post-death interest, the proceeds will not be taxable income. In the unlikely event that your mother's estate was large enough to owe estate taxes (around $5,000,000 including prior gifts) and could not pay its estate tax liability, you could be liable for the estate taxes up to the value of the insurance proceeds you received.
Answered on Feb 25th, 2013 at 9:04 PM
Probate Attorney serving St. Louis, MO
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Edward L. Armstrong, P.C.
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Life insurance proceeds are generally not income for tax purposes. There are exceptions. Missouri has no inheritance tax and unless your mother's estate was over $5 Million there should be no federal estate tax.
Answered on Feb 25th, 2013 at 8:37 PM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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There is no inheritance tax in California. Probably the insurance company sent you a statement showing how they calculated what they paid you. If a portion of it was INTEREST or DIVIDENDS then you must include that portion in your 2013 income.
Answered on Feb 25th, 2013 at 3:00 PM
As to your question about inheritance tax and life insurance. Life Insurance is not part of the estate so it is not subject to the estate tax.
Answered on Feb 25th, 2013 at 3:00 PM
Generally, life insurance proceeds are income tax free. However, they are subject to federal estate tax and state inheritance taxes depending on the state in question. The federal estate tax will depend on the year of your Mothers death. There is no separate inheritance tax in the state of Colorado.
Answered on Feb 25th, 2013 at 3:00 PM
Estate Planning Attorney serving Wilmington, DE
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Reger Rizzo & Darnall, LLP
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In Delaware the proceeds from a life insurance policy are not taxable.
Answered on Feb 25th, 2013 at 2:59 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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Normally not, but I would need details.
Answered on Feb 25th, 2013 at 2:59 PM
If you mean the death benefits of the insurance policy, then these funds are generally free from income tax to named beneficiary or beneficiaries. However, there may be some federal estate tax consequences that may arise. It is advisable to obtain tax advice regarding these proceeds.
Answered on Feb 25th, 2013 at 2:59 PM