[WSBAPT] Advances on Inheritance

Thu Oct 5 14:54:29 PDT 2023

I am assuming that these two wills do not create a contract to make a will.  Although you describe them as mutual wills, I assume they create no obligation on the part of the wife.  Oregon has a statute that says that mutual wills do not create any such obligation.  I assume Washington has a similar statute.
Based on that assumption, I agree with Dalynne.  This would be a gift from Wife to Sons.  Not taxable to sons for federal income tax purposes.  Wife would be required by federal law to file a federal gift tax return, although there would be no penalty for failing to do so as long as Wife's estate stays below the federal exemption (which, by the way, is scheduled to be cut in half in 2026).  And Washington has no gift tax.  And these gifts would not impact Wife's Washington estate tax, other than to reduce her net worth and thus reduce her Washington estate tax when she dies.  The sons will receive the property at its current income tax basis in the hands of Wife.  If they wait until Wife dies, they get a stepped-up basis.  If cash is used, this is not a problem.
The receipts to be signed by the sons should state that they are entitled to nothing further.  Wife should be released, and the release should inure to the benefit of her heirs, successors, assigns, and personal representatives.
Lots of moving parts.  Nothing is simple anymore.
Phil Jones

Philip N. Jones
Duffy Kekel LLP
900 S.W. Fifth Ave. Suite 2500
Portland, OR 97204
pjones at duffykekel.com<mailto:pjones at duffykekel.com>
(503) 226-1371 - office
(503) 853-1482 - cell
(503) 226-3574 - fax

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Dalynne Singleton
Sent: Thursday, October 5, 2023 2:17 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Advances on Inheritance

I'm thinking a little differently.  If the wife wants to provide those monies now, then she should re-draft her Will and indicate the sons get nothing as they have been paid $100k.
Then, the sons sign a receipt for the gift of $100k each to the wife.  Not sure if there would gift tax to benefit wife but you can check with CPA on that.

Dalynne Singleton
Gourley Law Group
Snohomish Escrow
The Exchange Connection
1002 10th Street / PO Box 1091
Snohomish, WA 98291
360.568.5065
360.568.8092  fax
dalynne at glgmail.com<mailto:dalynne at glgmail.com>
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Mark Anderson
Sent: Thursday, October 5, 2023 1:50 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Advances on Inheritance

Dear Listmates:

Husband and wife executed mutual wills under which a payout of $100,000 would be made to each of the husband's two sons, but only after both husband and wife had died.  This is all the sons would be entitled to under the wills.

The husband died.  Husband's sons want to be paid now, rather than wait until after Wife dies.  Wife (my Client) says that sufficient funds exist to do this and is willing to make this happen.

My initial thought is to have my Client tender the money into my IOLTA trust account.  I would then distribute the funds to the sons after having them each execute a Receipt and a Release of the Estate and the Personal Representative (whoever that may be) for the advance.  This will require some "custom" drafting of the Receipt and Release in that my Client has not yet died and so does not have a probate estate.  I will also recommend my Client that she update her existing estate planning documents to reflect the payments made and the release of any personal representative may be appointed for a probate estate.

I have got some questions about this.

  1.  Is this the best way to handle this advance?
  2.  What are the tax impacts, if any, for the Client?
  3.  What are the tax impacts, if any, for the recipients?  (Just curious, in case they may want to reconsider their request to be paid now)
  4.  Are there any other considerations in which I should be aware in dealing with this situation?

In advance, thanks for your input on this.

Mark B. Anderson
ANDERSON LAW FIRM PLLC
821 Dock St  Ste 209  PMB 4-12
Tacoma, Washington 98402
+1 253-327-1750
+1 253-327-1751 (fax)
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