I am named beneficiary of my late father's life ins policies. Do I have to pay taxes on that money? I am in NJ

Asked almost 3 years ago - Denville, NJ

The policies add up to about $55k. Thank you for help.

Attorney answers (3)

  1. Steven M Zelinger

    Pro

    Contributor Level 20

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    Answered . If it is as simple as the fact that a life insurance policy owned by your father is payable to you as the named beneficiary you will not owe any income tax as the person receiving the life insurance payment. Generally, life insurance payable to a named beneficiary is not income-taxable to the beneficiary. The only likely source of taxable income here would be if it was actually an annuity that generated a taxable portion which is deemed income in respect of a decedent.

    Also on a tangential note, your father's estate will not likely have to include the amount for inheritance tax purposes, but it some larger estates the life insurance could be included in the decedents NJ estate tax taxable estate.

    This is not legal advice nor intended to create an attorney-client relationship.
  2. Mary Tom

    Contributor Level 14

    5

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    Answered . As the recipient of a life insurance policy, you are not taxed.

    You do not state what State your father resided in at the time of his death. Depending on the state law in that state, the life insurance may have to be disclosed on an Inheritance Tax filing in that State. If your father died in NJ, there is no tax on any asset received by a child if the total estate is valued at less than $675,000.

    Good luck.

    MARY TOM, ESQ.
    HUNZIKER, JONES & SWEENEY, P.A.
    Wayne Plaza II
    155 Route 46 West
    Wayne, NJ 07470
    Phone No. (973) 256-0456
    Fax No. (973) 256-4784

    This message does not constitute legal advice and is for informational purposes only. This message does not... more
  3. Christopher Michael Larson

    Contributor Level 19

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    Answered . The previous attorney is correct. Since life insurance is purchased with post-tax proceeds, it is not taxable when received.

    Christopher Larson
    Insight Law
    www.insightlawfirm.com

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