Insurance FAQ
 

Gross Estate Tax & Life Insurance Taxed? SGLI Military ?

Question by Liz | Posted in United States

I put military because I don't know if there is an exception or not for Service Members Group Life.
My son has insurance money from his daddy, now I can't touch this money w/o a court order all I can do is say where it should go & if my son needs it then I will request it. My son is 2. Is tax payed on this? It is now in a bank account with the title: Estate of (my son's name). I was trying to figure out if my minor child has to pay tax on his stuff. Also the SGLI insurance money that I

Answer: You do not have to pay taxes on the life insurance money when you receive the benefits from the insurance company. You also don't have to pay any taxes when you spend it unless you placed it in an IRA or some kind of retirement account.

You will have to pay taxes on the interest income you earn each year unless you place it in some kind of tax deferred investment like an IRA or 529 college savings plan.
 
 

How Is NJ And Federal Estate And Income Tax Handled For Annuities And Life Insurance?

Question by Elisabeth F | Posted in United States

Serving as executor - both parents passed in 2005. How is the Estate and Income Tax handled for both New Jersey and Federal returns on Annuities and Life/Term Insurance. Not sure what is taxable as Income and what is taxable to Estate. Also, not sure who pays the taxes, beneficiary or estate on the income tax - assuming there is a income tax liability.

Answer: Annuities are taxable.
Life insurance is not.
Each recipient will be responsible for any tax obligation as the amount will be added to the respective income for the current year paid.

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Why Isn't Or Is Life Insurance Considered Like Estate Taxes?

Question by DarwingotnastyontheBeagle | Posted in Politics

Are they subjected to same tax changes? Can someone leave their family too much in life insurance? Should there be a life insurance cap? Or maximum number of policies?

Answer: Many wrong answers here. Life insurance proceeds are INCOME-tax free, but they ARE a part of the taxable estate, to the extent the decedent owned the policy.

Example. If an individual dies with $5 million in property, and owns a $1 million life insurance policy payable at his death, his taxable estate is $6 million. Assuming the new $5 million estate-tax exemption, his estate would owe 35% on the overage, or $350,000.

Hope that helps.

PLEASE VOTE to avoid a TIE. On behalf of all of your responders, who take the time and effort to help questioners in this free Yahoo! community, THANK YOU in advance for taking the time to choose your "Best"

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Do Life Insurance Benefits Pass Tax Free To An Estate?

Question by fred w | Posted in Insurance


Answer: If you own a life insurance policy, or name either yourself or your estate as beneficiary, the policy death benefit will increase the size of your estate. If you think that you will have a federal-estate-taxable estate (that is, large enough) an insurance policy on your life is usually best owned by someone else. You can establish an irrevocable trust to be the owner and beneficiary of your life insurance policy. Alternatively, you might have your adult children own, and be beneficiaries of, the policy. Either will avoid inclusion of policy proceeds in your estate. It is also important to name contingent beneficiaries in case someone dies and the proceeds end up in your estate anyway. Dealing

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Do Annual Expenses Include Car And Life Insurance And Real Estate Taxes?

Question by Nick | Posted in Insurance

thx for the help =]

Answer: Yea if you pay for it annually. (basically not once at the end/beginning of the year)

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Guest Post: Death to the Estate Tax | taxgirl

by Kelly

This guest post is courtesy of Vinny Kochetta (for more on the topic, see the original post ):. I do not see an ethical basis for the estate/death tax. This week, I’ve asked readers to chime in on the Bush tax cuts. Eventually, I had an opportunity to purchase a portion of this company that I was committed to. Of course, I had to rely heavily on financing to obtain a part of this S Corp, so a significant part of the company profits are going to pay the bank... Even if a half a bazillion is a lot of money… why would this be reduced to a quarter of a bazillion if that child chose to pass on the fortune. If a bazillionaire chooses to be frugal and pass his fortune to a child, why should the government take half of that....

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