Author Topic: Inheritance and gifting question  (Read 678 times)

papillon

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Inheritance and gifting question
« on: February 15, 2020, 11:53:52 AM »
My father-in-law has written my husband's sister out of his will.  We want to gift her a fair share after his death.  How do we do this beyond the $15000 per year?  I've read about the "federal lifetime exemption" which seems to indicate we can gift more without paying taxes.  Looking for advice.

secondcor521

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Re: Inheritance and gifting question
« Reply #1 on: February 15, 2020, 06:19:34 PM »
Depending on how your FIL's will is written and possibly the intestacy laws in FIL's state of residence, you may want to look into a partial disclaimer, also sometimes called a renunciation.

You can also give more than the annual gift limit.  First, you both can give her $15K (or whatever the limit is each year), so you can effectively give her $30K per year.  If she is married, you can both give her spouse $30K per year too.

If you want to give more than the limit, you can do so, but to avoid gift taxes you'll have to file a Form 706, and it will eat into your lifetime exemption (which may or may not be a problem in the future, depending on what they do with the estate tax exemption and what your net worth grows to).  Also, states sometimes have lower estate tax exemptions than the federal level.

mistymoney

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Re: Inheritance and gifting question
« Reply #2 on: February 16, 2020, 07:21:20 AM »
why did he do it?

And - how would he feel about you essentially negating his decisions - might it prompt him to write you out too?

kpd905

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Re: Inheritance and gifting question
« Reply #3 on: February 16, 2020, 07:29:14 AM »
What is the rough total you plan to give?  The lifetime exclusion is $11.58 million per person, so $23 million between you and your wife.  After you give that much, you have to worry about gift tax.

maizeman

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Re: Inheritance and gifting question
« Reply #4 on: February 16, 2020, 07:35:32 AM »
My father-in-law has written my husband's sister out of his will.  We want to gift her a fair share after his death.  How do we do this beyond the $15000 per year?  I've read about the "federal lifetime exemption" which seems to indicate we can gift more without paying taxes.  Looking for advice.

Yes you can give more than that without paying federal tax.

The federal lifetime exemption is the same "bucket" as your own estate tax exclusion. So you'd have to file an extra form, but beyond that the only consequence would be that when you and your husband die, if you leave behind an estate that's almost big enough to qualify for the federal estate tax (currently ~$22M for a married couple) your own heirs might have to pay a little more in estate tax than they otherwise would.

And as secondcor521 points out, depending on the amount of money at play, a married couple can actually gift an individual $30,000/year tax free without using up the lifetime limit, and a married couple can gift another married couple $60,000/year tax free without using up the lifetime limit.

Catbert

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Re: Inheritance and gifting question
« Reply #5 on: February 16, 2020, 01:57:20 PM »
And just to emphasize what was said above, the 15K per person gifting can be repeated year after year. 

Personally, I would not want to eat into my tax free estate limit bc you don't know what the limit will be when you die (it could go down) and who wants to track that for 40 years.