My wife was 1 of 4 sisters (beneficiaries) to their mother's life insurance policy. They all filled out the 8-page company document to have taxes withheld and payments distributed, but the company issued ALL of the taxable income to 1 sister, along with a 1099 for the entire amount. There is only 1 SSN on the tax form, so the other sisters cannot separate their shares, even though they live in different states which have different tax brackets. Can the insurance company do this? Are there IRS regulations for the insurance companies to separate the proceeds and report income to all 4 beneficiaries?
