Question
What is the name of your state? Colorado
I recently learned of a law wherein if there is three or more people involved in a life insurance policy the federal government considers the benefit taxable. Many of my life insurance policies have three people involved. Is there a way to set up policies so they are not taxed. EX. My x-husband and I have a joint policy on his life. He does not pay on he policy, I do. I wanted to give half of the benefits to our son, even though I am listed as beneficiary. Even if my son was a co-beneficiary with myself, we would still have to pay taxes on the benefit. Someone suggested setting up a trust as a beneficiary, but wouldn't there still be taxes required once the money was taken from the trust?
Thanks, Donna
Answer
So wherever you learned about this supposed law you need to try to find the exact citation of where it is--state law, federal law, or where?
No way to get the money without being taxed--the insurance companies report all payments to the IRS. Trusts also pay taxes.
DANDY DON IN OKLAHOMA (tiekh@yahoo.com)