Foreign life insurance and form 3520

Forum|Forum|1 year ago
October 14, 2024
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Do you need to report proceeds from foreign life insurance on form 3520 upon the passing of a foreign relative if it's over $100,000? I'm a US citizen.

The foreign relative who passed is the owner of the foreign life insurance, I am just a beneficiary.

If I am reporting it on form 3520, which year should I report, the year the death occurred(2023) or the year the proceeds were actually paid out to me in my US bank account(2024)? It took a while for the foreign insurance company to do the payout since it was an international wire.

My questions, in short are:

1. Do I need to file form 3520?

2. If yes, for which year(2023 or 2024) should I file?

Not A Product Question

Best answer by pk12_2

@oboero2 my condolences for your loss.

Generally you have to report this for the year in which you received the bequeathal -- in your case in 2024. It does not go with your return, though.

Here is more on this from the IRS --> Gifts from foreign person | Internal Revenue Service

I am assuming here that the insurance distribution occurred first into the Estate of the decedent and then on to you as the beneficiary. So for purposes of form 3520, it is foreign Estate distribution.

Is there more I can do for you ?

Anonymous_

Employee

No text available

pk12_2Answer

Employee

@oboero2 my condolences for your loss.

Generally you have to report this for the year in which you received the bequeathal -- in your case in 2024. It does not go with your return, though.

Here is more on this from the IRS --> Gifts from foreign person | Internal Revenue Service

Is there more I can do for you ?

oboero2Author

Thank you for your reply.

I don't think the insurance distribution went into the estate first. Since I was the beneficiary, the payout went directly to my US bank account without ever needing to even contact the decedent. Would this change anything?

pk12_2

Employee

@oboero2 don't believe it makes a difference. But I would still use the "Estate" as the issuer of the benefit --

(a) the Estate came into being as soon as the decedent passed and (b) the insurance claim & distribution became available only at that point. So I will stay with "Foreign Estate " just to keep everything copacetic.

Is there more I can do for you ?