My mother recently passed away and I received a life insurance check from prudential through my mother's life insurance company as a result of her work at Walmart. I am not a benefactor of her estate. It was just made out to me and my 9 year old sister. Do I pay taxes on the distribution?

ANSWER

The BIDaWIZ Team's Answer:

Are you the designated beneficiary of the policy and the Estate is not? Please confirm our assumption. Generally speaking, life insurance proceeds due to death that are paid out to a beneficiary in lump sum are not included as income to the recipient. As such, you would not be subject to taxes for receiving this distribution. This is referenced in Internal Revenue Code Section 101(a)(1) and IRS Publication 525.