Kentucky Statutes 140.030 – Taxation of contracts in contemplation of death — Proceeds of life insurance policies — Exemptions
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(1) If it appears, either from the will of the decedent or from extrinsic evidence, that an obligation of a contractual nature exists in favor of any person payable at or after death of the decedent, the sum so payable shall be treated for the purposes of this chapter as a taxable transfer, unless it affirmatively appears by competent evidence that a consideration substantially equivalent in value to the amount due under the contract was paid or furnished by or for the other party thereto during the life of the decedent.
(2) The proceeds payable under any life insurance policy on the death of the assured (other than a United States government life insurance policy or national service life insurance policy issued by or through the federal government), payable to the assured or his estate, shall be taxable as a part of the legacy as a distributable share of the beneficiary. The proceeds of an insurance policy payable to a designated beneficiary, including a testamentary or inter vivos trustee, other than the assured or his estate, shall be tax-free. The proceeds payable under any United States government life insurance policy or national service life insurance policy issued by or through the federal government, whether payable to a designated beneficiary or to the assured or his estate, and any pension or annuity payments made or to be made to the surviving spouse of an employee of a railroad or other carrier under the Federal Railroad Retirement Act of 1935 as amended, shall be tax-free, and shall not be considered in determining the value of any taxable transfer.
History: Amended 1974 Ky. Acts ch. 386, sec. 26. — Amended 1970 Ky. Acts ch. 34, sec. 1. — Amended 1954 Ky. Acts ch. 131, sec. 1, effective July 1, 1956. — Amended
1950 Ky. Acts ch. 146, sec. 1. — Amended 1948 Ky. Acts ch. 96, sec. 7a. — Amended 1944 Ky. Acts ch. 34, sec. 1. — Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. sec. 4281a-16.
(2) The proceeds payable under any life insurance policy on the death of the assured (other than a United States government life insurance policy or national service life insurance policy issued by or through the federal government), payable to the assured or his estate, shall be taxable as a part of the legacy as a distributable share of the beneficiary. The proceeds of an insurance policy payable to a designated beneficiary, including a testamentary or inter vivos trustee, other than the assured or his estate, shall be tax-free. The proceeds payable under any United States government life insurance policy or national service life insurance policy issued by or through the federal government, whether payable to a designated beneficiary or to the assured or his estate, and any pension or annuity payments made or to be made to the surviving spouse of an employee of a railroad or other carrier under the Federal Railroad Retirement Act of 1935 as amended, shall be tax-free, and shall not be considered in determining the value of any taxable transfer.
Terms Used In Kentucky Statutes 140.030
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Contract: A legal written agreement that becomes binding when signed.
- Decedent: A deceased person.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Federal: refers to the United States. See Kentucky Statutes 446.010
- Inter vivos: Transfer of property from one living person to another living person.
- Legacy: A gift of property made by will.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Trustee: A person or institution holding and administering property in trust.
History: Amended 1974 Ky. Acts ch. 386, sec. 26. — Amended 1970 Ky. Acts ch. 34, sec. 1. — Amended 1954 Ky. Acts ch. 131, sec. 1, effective July 1, 1956. — Amended
1950 Ky. Acts ch. 146, sec. 1. — Amended 1948 Ky. Acts ch. 96, sec. 7a. — Amended 1944 Ky. Acts ch. 34, sec. 1. — Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. sec. 4281a-16.