The life insurance policy states my mother as the beneficiary. My parents were divorced when I was a child so the insurance company stated that she is revoked as a benficiary and it automatically goes to my father's estate. My fathers estate was put into a trust fund when I was 13 and was dissolved when I was 24. The insurance company indicated it may need to be reopend in order to payout the policy. What type of taxes will I be having to pay on this? I have a brother so $7,000 will be going to him and $7,000 to me.
Most simple answer - probably not. Life insurance is usually paid out both estate tax and income tax free. (The insurance loby is about as strong as you can get).
It is possible that some quirk could cause it to be taxable, but that is unlikely. Take the issue to your tax return preparer in the sping.
Don't spend it all in one place!
Estate Planning Attorney
Sounds like good news. Insurance proceeds are not income taxable to the beneficiary. If by some weird quirk there is some income generated by the policy that is passed out to you there may be a taxable portion but probably not. I would discuss any paperwork you receive with your tax preparer to be sure but I doubt there will be any tax.
This is not legal advice nor intended to create an attorney-client relationship.
Personal Injury Lawyer
Most likely none. You will owe taxes on income earned on the capital after you inherit it.
In addition to Avvo's terms of usage, this answer does not create an attorney client relationship. In providing the information the author is not rendering legal or other professional services. If legal advice is required the requesting individual should seek the service of a competent legal professional.