received life insurance from my deceased father and it wasn't probated but added to his probate estate for taxes and 9 years later they want me to pay all the taxes. is this correct
The answer to the question of whether or not beneficiaries have to pay taxes on the money received from life insurance policies is: no they will not have to.
Proceeds from a life insurance policy to a beneficiary are usually paid free from federal income tax.
A will cannot insert a name or change the name of a beneficiary of a will. However, you can have an insurance policy made payable to the estate, then give the proceeds of the policy to a named beneficiary. Problem here is that the policy proceeds run through the estate and become subject to debts and administration expenses and perhaps taxes, whereas they would not be if a beneficiary were named in the policy.
Usually, life insurance proceeds are free from federal taxes. If the beneficiary is an individual person/persons, the proceeds of a life isnurance policy are tax-free. If the beneficiary of a life insurance policy is the "Estate" of the insured person, the proceeds may be subject to estate taxes.
No, they will pay the claim to you and then you will be able to do what is fiscally responsible.
If you are the named beneficiary of your sisters life insurance policy then there is no tax. If her policy however paid into her estate and you inherited the funds, then it would be taxable.
If you are an individual who receives the life insurance proceeds, you may not have to pay any federal income taxes on the benefits. If the life insurance policy names a trust as beneficiary, the trust may be subject to estate taxes.
No No
Life insurance proceeds are received income and state tax free, regardless of whether they are from an individual or group life policy.
When a person insured by a life insurance policy dies while the policy is "In Force", the death benefit is paid to the beneficiary. Life insurance proceeds are usually not subject to state and federal income taxation. But, if there is no beneficiary, the proceeds of a life insurance policy may be included in the estate of the deceased person. Then, it may be subject to state and inheritance taxes. Also, the proceeds may be subject to federal estate taxation. If you own all or part of the life insurance policy at the time of your death, the proceeds may be included in your gross estate for federal estate tax purposes. Also, federal gift taxes and state inheritance taxes may apply to life insurance policy proceeds under certain circumstances.
Generally, no. So long as a beneficiary is designated the Policy does not need to be and should not be included as part of an estate. The Policy proceeds or "death benefit" is the property of the named beneficiary, they are not the property of the deceased and therefore not a part of the decedents estate. Only when the Insured failed to designate a beneficiary or no eligible beneficiary is available would the Life Insurance Policy proceeds revert to the named insured and then be included in the Estate.If the policy was owned by someone other than the deceased, the insurance proceeds will not be part of the estate.Since estate taxes (when applicable) can be as high as 55% and the claims of creditors can take an entire estate, it is very important to consult an experienced lawyer prior buying any life insurance policy to ensure that the proceeds go to the heirs and not to pay taxes or the deceased's creditors.
With a properly named beneficiary there are no federal taxes on life insurance. What exactly are you asking in your question?