If I give our 2 boys part of their mother's insurance death benfit, will they be taxed. I know I am not taxed.

Question

I want to help our boys out financially, but don't want to burden them with having to pay taxes. Would this be considered inheritence or a gift or what. Both boys are out on their own. One is single while the other is married with 3 kids.

Answer 1

YOU are the one who may have to pay taxes, they will not.  The recipient of a gift NEVER pays any tax on it, only the donor.

If you are the beneficiary of the policy, anything that you give to anyone else is a gift.  You will have to file a Gift Tax Return yourself if you give any one recipient more than $12,000 in any one year.  You can give $12k each to an unlimited number of recipients but once you exceed $12k to any single recipient the Gift Tax rules kick in.  

Once you use the $12k annual exclusion, you will start to use your $1,000,000 lifetime exclusion.  Once that's used up, you will start paying Gift Tax on all gifts over $12k per recipient per year.  Also note that that $1,000,000 lifetime exclusion reduces YOUR Estate Tax exclusion dollar for dollar so it could affect the taxes on your estate when you pass.

Answer 2

the named beneficiary (which I assume is you) Iinherits - TAX FREE.

Whatever you give to your sons  is a *Gift*.

You need to check the tax laws about how much you can *give* to each of them in a yer before they have to report & pay taxes on their *gift*.

If I remember correctly there are both  yearly and a lifetime amounts.