Legal Question in Insurance Law in Virginia

Life insurance/real estate question

Have 3 children.Divorced. My elderly

Mom lives with me. Want her to have life rights to house if I precede her in death. Have life insurance policy of $500,000.00 to be split between my 3 kids. Is that money tax free? If so, could they pay off my house with that money and have it then put in their names? After Mom passes, then they can sell it and split it 3 ways. I gather they would pay some sort of tax after they sell the house?


Asked on 5/02/08, 9:40 am

1 Answer from Attorneys
Michael Hendrickson Law Office Michael E. Hendrickson

Re: Life insurance/real estate question

Life insurance proceeds payable to beneficiaries as well as other monetary inheritances normally do not subject the beneficiaries to taxation liabilities.

In the last part of your scenario, however, the children may have some capital gains liability if they hold the house for a sufficient time despite the stepped up basis which they received upon inheriting the property.

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Answered on 5/02/08, 10:05 am


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