Dear Judy,
I just found out I’m likely to inherit $200,000 from my grandparents. I’d like to be able to share half of that amount with my mother, who needs the money.
Once the money comes to me, will I be able to give my mother $100,000 and share my inheritance equally with her? And if I am allowed, how would I go about doing that?
Thanks so much
Colleen
Dear Colleen,
Once again, to answer your very interesting legal question, I’m turning to the brilliant Bethesda, MD estate attorney, Marc Levine, who is expert on these sorts of issues. Here’s what Marc has to say:
“If the money is left to Colleen in her grandparents’ Will such a way that she can disclaim part of the inheritance and that part will go to her mother — then there’s no problem.
“But if that won’t work (and often it won’t!), Colleen would then simply accept the whole $200,000 inheritance — but could “gift” funds to her mother. For example: Colleen can gift up to $13,000 a year to her mother. Or, if Colleen is married and her husband agrees to this idea, she and her husband could gift a total of $26,000 to Colleen’s mother per calendar year.
“If her mother is married, then Colleen could gift the couple another $26,000 per year under the same rules. But a warning: If Colleen gifts her mother the entire $100,000 in one calendar year, then she has to file a Form 709, Gift Tax Return — and she has to tell the IRS that she made this large gift.
“The IRS would then keep track of that gift– and it may or may not have a negative impact on Colleen’s estate at her death. She will probably not have to pay any gift tax during her life, though.
“My advice: Colleen should discuss this proposed gift with her estate planning attorney or accountant before making any transfers to her mother.”
Thanks Marc! And as for you, Colleen: I think your mother has a wonderful (and generous) daughter.
Thanks for writing
Judy
If the mother needs money, why are her parents skipping a generation and leaving it to the granddaughter? Seems like there is more than meets the eye here. Colleen should look into it before distributing money which apparently is not being given directly for a reason.
Talk about counting your chickens before they hatch!
I faced a similar situation, and did the WRONG thing. I wish I had seen Marc Levine’s advice then.
Great work Judy, in giving people what they need to make sense of our crazy estate and gift tax systems.