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Subject Author Date
Gifts as advance on inheritance Earl Kiosterud 02-02-2007
Posted by Earl Kiosterud on February 2, 2007, 1:32 am
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 May someone make a gift (up to $12K) to a beneficiary of his
will (a fixed amount) with the agreement to lower the
beneficiary's inheritance by the amount of the gift? In
effect, it would be giving an advance on the inheritance.
This would (1) let the beneficiary have some of the money
sooner, (2) reduce the basis of the estate tax (unless such
a gift doesn't get the $12K exemption). Is this
permissible? Thanks.

--
Earl Kiosterud
www.smokeylake.com

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Posted by Seth Breidbart on February 2, 2007, 7:36 pm
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> May someone make a gift (up to $12K) to a beneficiary of his
> will (a fixed amount) with the agreement to lower the
> beneficiary's inheritance by the amount of the gift?

Those are two separate things.

1. He may make a gift of up to $12K without tax consequences
to anybody, including a beneficiary.

2. He may amend his will to reduce the amount a beneficiary
gets by any amount he wants, whether or not there's a gift
made.

Seth

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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Posted by Ernie Klein on February 2, 2007, 7:37 pm
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> May someone make a gift (up to $12K) to a beneficiary of his
> will (a fixed amount) with the agreement to lower the
> beneficiary's inheritance by the amount of the gift? In
> effect, it would be giving an advance on the inheritance.
> This would (1) let the beneficiary have some of the money
> sooner, (2) reduce the basis of the estate tax (unless such
> a gift doesn't get the $12K exemption). Is this
> permissible? Thanks.

If you give the money away it won't be in the estate to be
taxed, which is very reason that many folks make such gifts;
to reduce the value of the estate so that it will taxed
less.

As far as structuring your will to take the gifts into
account and reduce the otherwise inheritance is more of a
legal question about wills and inheritance rather than a tax
question and would probably get better response in a legal
newsgroup (misc.legal.moderated).

It would probably help to say where you are located as
probate laws vary State to State.

My guess, (I am not an attorney) is you could structure a
will to give a person a given sum should you die on year 1
and decrease that amount by $12K each year you live after
that, ending up at zero should you live long enough.

--
-Ernie-

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Stuart A. Bronstein on February 3, 2007, 2:14 am
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>> May someone make a gift (up to $12K) to a beneficiary of his
>> will (a fixed amount) with the agreement to lower the
>> beneficiary's inheritance by the amount of the gift?

> My guess, (I am not an attorney) is you could structure a
> will to give a person a given sum should you die on year 1
> and decrease that amount by $12K each year you live after
> that, ending up at zero should you live long enough.

You could do that. You could even have a provision in a
will that says that any gifts you have given any of your
heirs (or gifts over a certan threshhold) are to be deducted
from that child's share of the estate.

The only problem will be determining what gifts there were
and which are to be deducted from a beneficiary's share.

Stu

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Phil Marti on February 2, 2007, 7:37 pm
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> May someone make a gift (up to $12K) to a beneficiary of his
> will (a fixed amount) with the agreement to lower the
> beneficiary's inheritance by the amount of the gift?

Sure. The only will that counts is the last one. The fact
that you intended to leave a bequest to this person doesn't
alter the tax-exempt gift rule.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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