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Volume 3 - Opinions of Counsel SBEA No. 102

Opinions of Counsel index

Veterans’ exemption (eligible funds) (government life insurance dividends) - Real Property Tax Law, § 458:

Dividends on government life insurance which are retained by the Veterans’ Administration and applied toward the purchase of additional paid-up insurance are eligible funds.

We have received an inquiry as to whether dividends on government life insurance retained by the Veterans’ Administration and applied toward the purchase of additional paid-up insurance are eligible funds for purposes of the veterans’ exemption.

Subdivision 1 of section 458 of the Real Property Tax Law provides, among other things, that real property purchased with “insurance, or dividends or refunds on such insurance” constitute eligible funds. Paragraph 2 of subdivision 1 provides that dividends retained by the Veterans’ Administration toward the payment of premiums on insurance policies retain their status as eligible funds. This language was added to the statute in order to avoid the impractical requirement that the dividends be forwarded to the veteran, deposited in his account and other money returned to the Federal Government in payment of insurance premiums.

It is also our opinion that the same rationale should be applied in case of dividends which are retained by the Veterans’ Administration and applied toward the purchase of additional paid-up insurance. Any other interpretation would result in serious problems and complications in the administration of the exemption statute by local assessors and would result in an undue burden upon applicants in proving the portion of dividends used to pay premiums on existing policies as opposed to the portion used to purchase additional insurance pursuant to this option.

May 29, 1974

Updated: