My brother died about 2 weeks ago, and a couple days ago we all began settling the death benefit and all of the paper work, and so on. He was a Marine, so that's why it was such a big amount. My brother assigned my mother to be the beneficiary if anything ever happened to him, and it did. I heard that sometimes, a check can be taxed over 40%, which is outrageous. In a few weeks, my mom will recieve the $400,000, at which she was planning on writing out a check of $397,000 ish to give to his now widdowed wife, keeping $3,000 to pay for a few extra funeral costs. By default, she was already given $100,000 simply for being his wife. When she gets her half a million, will she be losing 40% to taxes? That's a $200,000 loss, simply by taxes. That's enough to survive 7 years if your smart about it, and they cannot take that much away. She has a 2 month old baby now too. Is there a method of transfer that doesnt show up on income tax, or something? I hope you guys can help! Good luck!
-Andrew
Additional Details
My mom was thinking of making it a "One Time Gift", or maybe even putting them into CDs, but we are concerned that those too, may be taxed. Would it be smart to maybe get it in bills and hand it over to her? There must be a way around it. My sister in law didn't get half a million dollars to lose 40% of it. I hope you guys have a good idea.