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Example 7 Jeremy pays Micah $300 each month to live in a room in Micah’s house. Micah and Jeremy do not have a formal lease agreement, but the payment is regular and predictable. Count the $300 per month as income for BadgerCare Plus eligibility. 43. Inheritances, Bequests, and Devises An inheritance is property received from someone who is deceased without a valid will. A bequest is personal property received from someone who is deceased, as directed by that decedent’s will. A devise is real property received from someone who is deceased, as directed by that decedent’s will. Inheritances, bequests, and devises are generally not taxable, and, as a result, the value of the inheritance, bequest, or devise is generally not counted as income. However, there are a few forms of inheritances or bequests that may be taxable. For example, distributions from an inherited pension are usually taxable to the beneficiary if the distributions would have been taxable if the deceased were still living. In addition, income generated from an inheritance, bequest, or devise is usually taxable. For inheritances, bequests, and devises that are taxable, the income should be counted only in the month it was received if it was received as a lump sum. If the payments are regular and predictable, they should be prorated (unless they are received monthly) and counted accordingly. Example 8 Roger’s aunt passed away, and Roger inherited her rental house. It is worth $100,000. The house is occupied by tenants who pay $800 a month in rent. At the time of the deed transfer, the tenants owed $3,200 in back rent. The value of the $100,000 property is not taxable, but if the tenants pay Roger the $3,200 in back rent, that income is taxable and would be counted in the month it was received. If they pay Roger $800 a month on an ongoing basis, this income would also be taxable and would be counted based on rules regarding rental income.

Note Income from the sale of inherited property is taxable if the property is sold for more than the fair market value on either the date of the decedent’s death or on the alternate valuation date. In Example 9, if Roger were to sell the rental house for $150,000, the $50,000 gain would be taxable. If Roger receives income from the sale in a lump sum, this income would only be counted in the month it was received.

Example 9 Darcy inherited her husband’s $150,000 life insurance policy. In most cases, life insurance policies are not taxable when they are inherited, so the $150,000 should not be counted as income. However, Darcy receives an ongoing interest payment of $1,200 a month from the policy. This amount is taxable and would be counted as unearned income. Income generated by an inheritance, bequest, or devise includes situations in which someone is the beneficiary of a trust or estate, and the trust or estate holds assets that are generating income. If the trust or estate distributes income to the beneficiary, the beneficiary is responsible for paying taxes on that income. Example 10 Keisha is the beneficiary of a trust. Land was given to the trust, and it generates interest that is distributed to Keisha as the beneficiary. Count this interest as unearned income.