Am I as beneficiary to pay taxes?

[Tamara Tilus]

What is the name of your state? California

Our daughter passed away and she had two insurance policies totaling 450.000. She made me, her mother, beneficiary, knowing I would divide the monies properly between her three children and her three grand-children. She left a will with the instructions for her children, on how they are to recieve the monies, but did not get it witnessed. The insurance monies came this week and I deposited it in my account. There is a fifteen day hold on it from the bank. All three children (adults) want the probate court to abide by their mother's wishes in the will. When I give these kids the monies, will there be any taxes on my part for being the beneficiary, but acting only as the intermediary, because we haven't gotten into probate court yet, where the kids are choosing me to get the "letters of administration" from the court. Will there be any consequences on any of us with the Internal Revenue Service or the state of California?

 

[tranquility]

If you were the beneficiary on the life insurance, the money is not in the estate and the will would not control. You can do with the money as you please. (Absent some more difficult legal theories to prove like there was a trust of some sort.) If you give the money to the children, if the amount is above the statutory level (currently $12,000), you would need to file gift tax returns.

The will may be legal for other matters if it were written by mother's own hand, along with a few other formalities. Witnesses are only needed in a formal will. (Search for holographic california will on google for more information.)

 

[Dandy Don]

Please consult with a local CPA or tax accountant and he/she can explain the consequences and the tax liability for all parties involved before you make the distribution.

DANDY DON IN OKLAHOMA ([email protected])