Question about Insurance Benefits & Tax Liability?

No.

But... he will have to complete IRS Form 709 gift tax.

Currently, any gift over $13000 in one year, you must complete the gift tax form. However, there is a lifetime exclusion of $5M on gift tax.

- what this means, in the US the giver is responsible for the tax not the recepient. If your son gives away more than $5M in his lifetime, he would then owe tax

- this is the 2012 amount and changes annually, put the lowest it has been in recent history (10+ years) is $1M.

Let's hope your son becomes very successful, because he is already generous and some day has to deal with gift tax liability, but it won't happen with this transaction.

You don't.

He does, if he gives you more than $13,000 during the same year. A person who gives over $13,000 during the same year to the same family member must pay a gift tax. The person who receives the gift pays nothing.

If he gives you only $13,000 of the money each year, then it will take a long time (12 years) for him to give you the $150,000, but neither of you will have to pay any tax.

It's also a dumb idea for another reason. If you do not spend all the money before you die, and he inherits the rest of the money from you, then estate tax or inheritance tax may need to be paid, even though the money was already taxed when he gave it to you.

Yes, the amount he gives you, he will have to pay a "gift tax" on. YOU, however, don't have to pay anything.