Dulocracy wrote:My wife's parents were sold a whole life policy with the idea that it would pay for her college. It did. They recently gave it to us. We can either keep paying on it or we can take the cash value (around $8,000). We have decided to cash it out instead of paying on a whole life policy with a loan against it (about which I have read here). The form to cash in the policy indicates that it is a taxable event. The policy was in her name, but they paid for it. My questions are:
1) Is it a taxable event for my wife to take the money out of the life insurance policy?
2) Do I need to be worried about back taxes owed on money she used for college?
Dulocracy wrote:2) Do I need to be worried about back taxes owed on money she used for college?
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