Actually, gift tax is governed by federal law and not by state law, so these same laws will apply regardless of what state you or your children live in.
First, if and when gift tax is ever due, it is paid by the donor and not by the recipient of the gift. However, under current regulations, each taxpayer is allowed to give gifts in their lifetime of up to $1 million before any gift tax becomes due. This is part of what is called the Uniform Tax Credit Act.
In addition to the $1 million lifetime exemption, each individual is allowed to give annual gifts of up to $13,000 to any number of individuals, and those gifts do not even apply towards the lifetime exemption, nor do they need to be reported. Gifts which exceed the annual exclusion of $13,000 must be reported by the donor by filing Form 709 with the IRS to report the value of the gift. However, no tax is actually due unless that donor has already reached his $1 million lifetime limit. The amount reported then reduces that donor's remaining lifetime balance that he may give in non-taxable gifts.
Since you husband is deceased, he cannot now give gifts from his insurance proceeds.
So to sum up your particular situation, you may actually give gifts of up to $1 million total without having to pay any gift tax. But if you want to stay below the reporting requirements, then your gifts should not exceed $13,000 per year to any one individual.
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Thank you westlake and let me know if you have more questions.