Ky. Rev. Stat. » Chapter 140
Kentucky Revised Statutes

Ky. Rev. Stat. § 140.030 (2026)

Taxation of contracts in contemplation of death -- Proceeds of life

✓ current as of May 2026
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insurance policies -- Exemptions.

(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.

Notes of Decisions
Cited in 4 cases, 1966–2015 · leading case: Est. of McVey v. Dep't of Revenue, 480 S.W.3d 233 (Ky. 2015).
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Est. of McVey v. Dep't of Revenue, 480 S.W.3d 233 (Ky. 2015). “Thus, the tax extends to property transferred “by will or by the laws regulating intestate succession, or by deed, grant, bargain, sale or gift made in contemplation of death or made or intended to take effect in possession or enjoyment at or after the death of the grantor or…”
Kentucky Trust Co. v. Dep't of Revenue, 421 S.W.2d 854 (Ky. Ct. App. 1967). · cites it 4× “It is unnecessary for us to consider the additional contention of the taxpayer that KRS 140.030 (which declares insurance proceeds nontaxable) should prevail over KRS 140.”
Luckett v. First Nat'l Lincoln Bank of Louisville, 409 S.W.2d 518 (Ky. Ct. App. 1966). · cites it 3× “010 and KRS 140.030(1). KRS 140.010 is a general statute imposing inheritance taxes upon property transfers effected by death.”
Kentucky Bd. of Tax Appeals v. Est. of Porter, 422 S.W.2d 895 (Ky. Ct. App. 1968). “The trial court correctly adjudged that the life insurance proceeds which passed into sub-trust A were exempt from inheritance tax by reason of KRS 140.030(2). We are unable to discern any distinction in the facts of the case at bar from those present in Kentucky Trust Company,…”
— Ky. Rev. Stat. § 140.030(1) — 2 cases
Est. of McVey v. Dep't of Revenue, 480 S.W.3d 233 (Ky. 2015). “Thus, the tax extends to property transferred “by will or by the laws regulating intestate succession, or by deed, grant, bargain, sale or gift made in contemplation of death or made or intended to take effect in possession or enjoyment at or after the death of the grantor or…”
Luckett v. First Nat'l Lincoln Bank of Louisville, 409 S.W.2d 518 (Ky. Ct. App. 1966). “010 and KRS 140.030(1). KRS 140.010 is a general statute imposing inheritance taxes upon property transfers effected by death.”
— Ky. Rev. Stat. § 140.030(2) — 3 cases
Kentucky Trust Co. v. Dep't of Revenue, 421 S.W.2d 854 (Ky. Ct. App. 1967). “It is unnecessary for us to consider the additional contention of the taxpayer that KRS 140.030 (which declares insurance proceeds nontaxable) should prevail over KRS 140.”
Luckett v. First Nat'l Lincoln Bank of Louisville, 409 S.W.2d 518 (Ky. Ct. App. 1966). “010 and KRS 140.030(1). KRS 140.010 is a general statute imposing inheritance taxes upon property transfers effected by death.”
Kentucky Bd. of Tax Appeals v. Est. of Porter, 422 S.W.2d 895 (Ky. Ct. App. 1968). “The trial court correctly adjudged that the life insurance proceeds which passed into sub-trust A were exempt from inheritance tax by reason of KRS 140.030(2). We are unable to discern any distinction in the facts of the case at bar from those present in Kentucky Trust Company,…”
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