Define: Terminally Ill

Business, Legal & Accounting Glossary

Definition: Terminally Ill



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Full Definition of Terminally Ill


For IRS tax purposes, a person is considered terminally ill if they have a condition that will lead to death in 24 months or less. Several kinds of financial implications and complications attach to those who are terminally ill. For instance, a terminally ill person may choose to make a viatical settlement of a life insuinsurance policy to obtain cash for medical expense and other needs. Or if the insurance policy has a provision for it, a terminally ill person might choose to collect living death benefits. Medical expenses incurred within a year of a terminally ill person’s death can then be claimed either as a deduction from estate taxes or as a deduction from the terminally ill person’s final income tax return. Management of a terminally ill person’s investments and estate, in general, may require special attention from whoever has been given power of attorney. Because capital losses from the sale of stock cannot be claimed after a person dies, a terminally ill person with significant taxable income is better off selling a losing stock position to realize the loss. A pre-death withdrawal from a terminally ill person’s IRA or other qualified retirement plan might be advisable to recognize the income on their tax return so the resulting income taxes can be deducted from estate taxes. Finally, monetary gifts or gifts of measurable monetary value given by the terminally ill individual may be viewed as distributions of the estate, rather than gifts, and be included in the estate tax calculation.


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https://payrollheaven.com/define/terminally-ill/
Modern Language Association (MLA):
Terminally Ill. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 06, 2020 https://payrollheaven.com/define/terminally-ill/.
Chicago Manual of Style (CMS):
Terminally Ill. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/terminally-ill/ (accessed: April 06, 2020).
American Psychological Association (APA):
Terminally Ill. PayrollHeaven.com. Retrieved April 06, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/terminally-ill/

Definition Sources


Definitions for Terminally Ill are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th February, 2020