by mele133 » Wed Jan 12, 2011 07:28 pm
My ex-boyfriend passed away and left a policy to me that should have been changed years ago but I guess he forgot about it. Now I would like to give this to the family but not sure how to go about doing that with out facing any tax issues.
Posted: Thu Jan 13, 2011 03:25 pm Post Subject:
You are the beneficiary of the life insurance policy?
You can disclaim the money and if there is no contingent beneficiary, it will go to your ex-boyfriend's estate, where any creditors will have first dibs on the money. The family might not get a dime as a result.
On the other hand, you can receive the money tax free and give annual tax free gifts of up to $13,000 per person to as many persons as you choose. If your desire is to pass all the money to the family, you may just have to do it over several years to avoid any gift tax obligations of your own (if you are married, you and your spouse may each give a $13,000 gift to each person).
Posted: Thu Jan 13, 2011 05:50 pm Post Subject:
Thank you so much for your reply. That route is what I am leaning towards as I feel he would want his mother to have it for her home expenses since he helped her with those.
Also I'm looking at putting the rest of the money into a trust for his teenage son to have for college when he gets older.
Posted: Thu Jan 13, 2011 06:24 pm Post Subject:
That route is what I am leaning towards as I feel he would want his mother to have it for her home expenses since he helped her with those.
Also I'm looking at putting the rest of the money into a trust for his teenage son to have for college when he gets older.
You can set up an IRREVOCABLE trust using the life insurance proceeds and naming the mother and son as the trust beneficiaries, and make an IRREVOCABLE gift to the trust which should escape gift taxes and, acting as trustee, dispense the money to the beneficiaries according to the trust document or the needs of the beneficiaries (depending on how the trust document is worded). This could create an income tax liability for the beneficiaries of the trust.
You will need to work with an experienced ESTATE PLANNING attorney to do this properly.
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