Transferred Term Life Insurance Ownership Tax Question

[ThaiLady1945]

Jurisdiction

Pennsylvania

I recently transferred ownership of my $300k term life insurance policy to my son. I've been diagnosed with cancer, and the cancer is no longer responding to chemo. I transferred it in case I become incapacitated, but am still alive, he'll be able to keep up with what needs to be done with it. My question is, will be be charged a "gift tax" for transferring this policy to him? We didn't know about the "gift tax" until we did some research here shortly, but it's already been transferred.

 

[army judge]

I recently transferred ownership of my $300k term life insurance policy to my son. I've been diagnosed with cancer, and the cancer is no longer responding to chemo. I transferred it in case I become incapacitated, but am still alive, he'll be able to keep up with what needs to be done with it. My question is, will be be charged a "gift tax" for transferring this policy to him? We didn't know about the "gift tax" until we did some research here shortly, but it's already been transferred.

As far as I know, insurance policy payouts aren't considered gifts.

To my knowledge, unless your policy is a special variety of policy, proceeds of someone's life insurance policy are paid to the beneficiary without being taxed.

To assuage your fears, why not call the insurance company and ask just to set aside any doubts you may have.

I wish you well as you fight a very evil disease.

I lost a sister to breast cancer after a five year struggle on her part.

I managed to survive my battle with colon cancer back in 2000.

I don't say I beat the evil disease, I simply say I survived so far, because nothings over until the obese one begins to warble.

God bless you, mate.

 

[adjusterjack]

My sympathies for you.

Term life has no cash value, only a death benefit, which is not taxable. The transfer of ownership has no gift tax consequences.

Make sure he continues to pay the premiums if you can't.

Look into other forms of estate planning. Make sure you have a will, living will, durable power of attorney, etc, and that beneficiaries are up to date on bank accounts, investments, etc.