Ex husband Passed- Life Ins in my Name- Want to give full amount to our Girls.

[allsaidanddone]

What is the name of your state? Michigan

When we divorced in 2010, our decree stated he could decrease the percentage of his life insurance out of my name into theirs as the girls got older. They were 12-13 years old then.

When he passed two years ago it was learned that he didn't do this and I received the full amount. I've since held it in a savings account and haven't touched it nor have I given it to them - yet. I did tell them it was their money and not mine and I've held to it. They are beneficiaries on the account. They didn't know about it until I told them.

I've held it there until I could get good investment advice as it is mine to do with on their behalf. (one daughter has already gone through the other monies in her name, the other made a nice investment with hers).

I understand that I shouldn't have sat on this for so long but I was just able to wrap up his probate along with other emotional issues so please don't judge.

Six months ago however, the "gift law" dawned on me. I don't think that I can open an investment with the full amount for them without a tax liability? Use to be 10k now its 13k. Each have a 100k coming to them from the life insurance that's in my name.

I'm guessing that even with the decree, it isn't worth a hill of beans since he didn't make it legal and that I'll need to disperse the monies to the their prospective investments yearly?

Am I correct? Any advice is again very appreciated.

 

[HRZ]

At least as posted the money is your money....how much to gift to whom and when is up to you and need not be equal if that is your call.

 

[adjusterjack]

Six months ago however, the "gift law" dawned on me. I don't think that I can open an investment with the full amount for them without a tax liability? Use to be 10k now its 13k. Each have a 100k coming to them from the life insurance that's in my name.

You're misunderstanding the tax thing.

Neither you nor your daughters pay any tax on gifts at that level.

You can give up to $15,000 to each of them without filling out a gift tax return. More than that you have to fill out a gift tax return but you don't pay any gift tax unless you give away more than the life time gift tax exclusion which is over $11,000,000.

Give them as much or as little as you want and don't worry about the taxes.

And you don't have to give them equal amounts. If one daughter is a spendthrift, then hold on to the money and just pay for important stuff for her instead of letting her have the money.

Oh, if you or they earn any money on that money the earnings are, of course, taxable.

 

[allsaidanddone]

You're misunderstanding the tax thing.

Neither you nor your daughters pay any tax on gifts at that level.

You can give up to $15,000 to each of them without filling out a gift tax return. More than that you have to fill out a gift tax return but you don't pay any gift tax unless you give away more than the life time gift tax exclusion which is over $11,000,000.

Give them as much or as little as you want and don't worry about the taxes.

And you don't have to give them equal amounts. If one daughter is a spendthrift, then hold on to the money and just pay for important stuff for her instead of letting her have the money.

Oh, if you or they earn any money on that money the earnings are, of course, taxable.

11,000,00.00 as in 11 million? If so, you're right, I have nothing to worry about. So when I choose to disperse (and it will be equally and soon but one won't have access for quite awhile; I'm thinking a trust with her), I can do so in a lump sum, file the appropriate form to the IRS and be done with it.

I've been earning the interest and declaring it so far which was agreed with from our girls. I did the probate without a lawyer but didn't want to be paid but they wanted this for me and agreed it was something I should keep. Not much but an awesome gesture! Anyways, I will continue to do so until it's dispersed which will be very soon now that I have a better understanding and the probate is over.

Thank you!

 

[HRZ]

You can gift $15,000 each per year with no impact on your lifetime exclusion. And for modest sums it may simply be easier to dole it out slowly to the one with dubious spending habits....trusts can be a layer of pain tax returns unless you enjoy paperwork ..and you can postpone or not make gifts if you think things are being wasted