The policies add up to about $55k. Thank you for help.
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.
The previous attorney is correct. Since life insurance is purchased with post-tax proceeds, it is not taxable when received.
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.
MARY TOM, ESQ.
HUNZIKER, JONES & SWEENEY, P.A.
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