taxes on receiving life insurance benis?

[kermitco]

Hello,

I am about to be paid benefits from my deceased
father's life insurance policy. I live in Southern
California but the benefits are from an Illinois plan. Will I have to pay taxes on those
benefits?

 

[ALawyer]

Unless you BOUGHT the policy from him in anticipation of his death (unlikely), life insurance benefits are INCOME tax free. (You'll probably also get a tiny bit of interest on the proceeds from his date of death -- that is taxable just like any other ordinary interest.)

The amount of the proceeds IS part of his total estate, and if his totla estate exceeds $675,000 (except hat he left his wife) then there could be Federal estate tax to pay.