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My father's assets were in a revocable trust and he was the…

My father's assets were...

My father's assets were in a revocable trust and he was the trustee. He placed his Federal Group Life Insurance policy into the trust. He died last July and the life insurance payout was made in September, 2017 to what had become an irrevocable trust. I am the successor trustee. Do I have to report the life insurance proceeds as trust income for 2017? None of the trust's assets have yet been distributed to beneficiaries.

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

No. Just that my father was the trustee of the revocable trust and I became successor trustee upon his death.

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Answered in 4 minutes by:
2/4/2018
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,055
Experience: Former IRS Revenue Agent
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Welcome to JustAnswer. I'm reviewing your question and will respond momentarily.
Regards,
Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP, IMTA

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Dear Customer,

1) Do I have to report the life insurance proceeds as trust income for 2017?

No. Life insurance proceeds is non taxable income.

https://www.irs.gov/businesses/small-businesses-self-employed/what-is-taxable-and-nontaxable-income

Please feel free to follow up.

Regards,

Fiona

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Customer reply replied 4 months ago
Is this true even though the life insurance payout went directly to my deceased father's trust? In other words, the life insurance payout is not reportable on a Form 1041 as trust income? The payout was approx $13,000

Dear Customer,

Correct. Do not include it in the taxable income.

Regards,

Fiona

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Dear Customer,

You may find this source helpful, too.

https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds/life-insurance-disability-insurance-proceeds

Regards,

Fiona

Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,055
Experience: Former IRS Revenue Agent
Verified
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