Life Insurance Payout and Taxes

[puckhead]

Looks like I might get a couple bucks from Dad's life insurance policy. It's not much, but I want to split three ways with my half-brothers. Quick look on the IRS website says this:

Do I report proceeds paid under a life insurance contract as taxable income?​

Answer:​

• Generally, life insurance proceeds you receive as a beneficiary due to the death of the insured person, aren't includable in gross income and you don't have to report them.

Life insurance & disability insurance proceeds | Internal Revenue Service

Find out if life insurance and disability insurance is taxable.

www.irs.gov

Any advice would be appreciated.

 

[Dback Jon]

That is correct - unless there is something very unusual in the policy, it is not taxable.

 

[puckhead]

That is correct - unless there is something very unusual in the policy, it is not taxable.

Well, that's a relief. Thank you.

 

[dscher]

Yep. If it's a straight basic death benefit plan, you should be good. I'm not sure how variable plans/VUL would work if there is cash value from invested funds though.

 

[BigRedRage]

Sorry for your loss

 

[puckhead]

Sorry for your loss

Thanks, BRR. I miss the old guy.

 

[puckhead]

Is there anything special to be done in order to split with my half-brothers? I don't want them getting audited either.

 

[dscher]

Is there anything special to be done in order to split with my half-brothers? I don't want them getting audited either.

I was assuming it to be an after tax gifting of proceeds, but double checked and found this. Hope it helps.

Can I legally split the benefits of a life insurance policy with two others with no tax implications?

My father listed me as the sole beneficiary on a life insurance policy. I have two siblings that I want to split the benefit with. Can I legally say I want to have them as equal beneficiaries so they each get an equal third of the benefit without tax implications to myself or them?

www.caring.com

 

[puckhead]

I was assuming it to be an after tax gifting of proceeds, but double checked and found this. Hope it helps.

Can I legally split the benefits of a life insurance policy with two others with no tax implications?

My father listed me as the sole beneficiary on a life insurance policy. I have two siblings that I want to split the benefit with. Can I legally say I want to have them as equal beneficiaries so they each get an equal third of the benefit without tax implications to myself or them?

www.caring.com

That is quite helpful. In fact, that's basically identical to my situation. Thank you.

 

[dscher]

That is quite helpful. In fact, that's basically identical to my situation. Thank you.