Please remember that this answer is provided in the spirit of public education, not as legal advice. If you require legal advice for a particular situation, you should consult an attorney.

Why do I need a will?
Is probate really that bad?
Do I need a Living trust?
Can my estate avoid paying an executor's fee?
How can I save taxes?
What is a bypass trust?
What is a life insurance trust?
What is a Crummey trust?
What is the difference between community property and separate property?

What taxes will the beneficiary of my life insurance policy have to pay?

What's the difference between an inheritance tax and an estate tax?
Who will get my property if I die without a will?

Copyright 1998-2022 by Dianne Reis.

What taxes will the beneficiary of my life insurance policy have to pay?
The beneficiary will not have to pay income taxes -- life insurance proceeds are exempt from the federal income tax if they are received as a result of the insured's death. Your estate may owe estate tax on the value of the proceeds, however. Without careful estate tax planning, your life insurance proceeds will be included in your taxable estate. Your estate will owe federal estate taxes if it is larger than $11.18 million, after subtracting any amount received by your spouse. The federal estate tax rate is now 40%.