united-states insurance utah inheritance tax-law
Life insurance and taxes: Does a sole beneficiary need to tell other heirs? (Utah)
<p><strong>Situation Updated</strong> </p>

<ul>
<li>A sibling died.</li>
<li>There are several heirs.</li>
<li>One heir was named the sole beneficiary of a life insurance policy, who received and deposited the check. </li>
<li>There is no will or other document that states how the deceased sibling hoped that the insurance proceeds would be used or otherwise distributed. </li>
</ul>

<p><strong>Question</strong>: Must the sole beneficiary reveal to the other heirs any of the facts about the policy, such as the existence of the policy, the amount of the policy, or anything else? </p>

<p><strong>Clarification Added</strong>
The beneficiary of the life insurance policy wants to keep it private to avoid family dramas (jealousy, hurt feelings, etc.). Assume that the beneficiary will talk to a CPA about any federal or state obligations (so taxes are not an issue).</p>

<p><strong>NO</strong></p>

<p>In most cases there is no tax owed by the beneficiary and it has, in any case, nothing to do with the estate.</p>

<p>Apparently the executor needs to list all insurance proceeds on an IRS form. But it is only part of the taxable estate if it pays to the estate or u see a complicated second case </p>

<p>“Insurance receivable by beneficiaries other than the estate. Include on Schedule D the proceeds of all insurance on the life of the decedent not receivable by, or for the benefit of, the decedent's estate if the decedent possessed at death any of the following incidents of ownership, exercisable either alone or in conjunction with any person or entity.
Incidents of ownership in a policy include the following.</p>

<p>The right of the insured or estate to its economic benefits.
The power to change the beneficiary.
The power to surrender or cancel the policy.
The power to assign the policy or to revoke an assignment.
The power to pledge the policy for a loan.
The power to obtain from the insurer a loan against the surrender value of the policy.
A reversionary interest if the value of the reversionary interest was more than 5% of the value of the policy immediately before the decedent died. (An interest in an insurance policy is considered a reversionary interest if, for example, the proceeds become payable to the insured's estate or payable as the insured directs if the beneficiary dies before the insured.)”</p>
