uncle leaves life insurance to nephew 4yr child, parents are to receive check-any tax implications regarding this action

My brother 29, single, no children, has only a few weeks to live. He designated my 4 yr old son (his nephew) to receive $85,000 . Insurance company stated upon his death they would make a check out to me since my son is only 4. Is there any tax implications because the check would be made out to me.

Asked on June 28, 2009 under Insurance Law, Kansas

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I am sorry for your family's impending loss.  Generally, life insurance proceeds paid to you because of the death of the insured person are not taxable.  You should, however, double check on the insurance company's statement that they will make the check out to you on your brother's death. Kansas has rules on payment of death benefits to minors.

When you name a minor as primary beneficiary and the amount of the benefit is less than $10,000, the money is paid out under the Kansas Uniform Transfers to Minors Act. KPERS sends the guardian or custodian a form to complete and the benefit is then paid to that individual on behalf of the minor. If the benefit is $10,000 or over, Kansas law requires a conservatorship be established to receive the benefit on the child's behalf.  Make sure that everything is in order so that there is no delay in payment.

 


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