Life Insurance - Do we pay Tax???

mazlester

Hi,

My father died recently and both he and my mum had insurance policy which pays out on the first death. My mum, my sister and I have been named as beneficiaries. Do we have to pay tax on the money that is paid out from the policy?

lisyloo

Was the policy in trust?
If you don't know you need to call the life insurance company to find out.
If it was in trust then it will be free of tax.

Money to spouses is tax free so I think your mum is OK.

IHT is paid on the estate only if it breaches the IHT threshold, so you need to work out the size of the estate.

Persumable the house was jointly owned between your parents so this automatically passes to your mum.

Assuming this is correct then you will probably find that the estate is within the NIL tax band for IHT, but you need to check this.

mazlester

Just to say thanks for your help. Yes it was in trust to all 3 of us. It's the last thing anyone needs to worry about at a time like this.

Many Thanks