[WSBAPT] Advances on Inheritance

Thu Oct 5 16:48:08 PDT 2023

Good call - I still think though I'd TEDRA that understanding that on next death the amount has already been paid.

Diane J. Kiepe
Douglas Eden, P.S.
717 W. Sprague Ave., Suite 1500
Spokane, WA  99201
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Heather de Vrieze
Sent: Thursday, October 5, 2023 4:39 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Advances on Inheritance

If the death is within the last 9 months, and Dad's Will says kids inherit $100k each if wife doesn't survive, it is worth looking at the option of a disclaimer by wife to preserve exemption and save the gift tax return. If a disclaimer is not an option, I too vote with the "it's a gift and just file a 709" and then quick change wife's Will to remove them as beneficiaries in her Will.

Heather

Heather S. de Vrieze
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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 Philip N. Jones
Sent: Thursday, October 5, 2023 4:24 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Advances on Inheritance

Keep in mind that the federal estate/gift tax lifetime exemption this year is $12,920,000 and next year it will be $13,610,000.
The federal annual exclusion for gifts this year is $17,000, and next year will be $18,000.  If you exceed those limits, then you eat into your $13.6MM exemption.
Usually not a problem.
Also keep in mind, if Wife makes a gift, it is a gift.  No way to convert it into an inheritance.  A TEDRA agreement that tries to describe it as an inheritance will be disregarded if it is really not an inheritance, and in this situation a gift will not be an inheritance.  Facts don't support it.
For a longer explanation of the tax consequences of altering an estate plan after the death, see the following:

Est_2023Winter.pdf (osbar.org)<https://estateplanning.osbar.org/files/2023/02/Est_2023Winter.pdf>

Phil Jones

Philip N. Jones
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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 Diane J. Kiepe
Sent: Thursday, October 5, 2023 3:59 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Advances on Inheritance

There will be no gift implications to the recipients (assume WA residents).

There will be, per the code, a tax filing requirement but most likely a zero-tax owed (unless already gifted over 12M each husband and wife).  Form 709 - user friendly, especially for cash gifts.

I personally would consider a time value of money and would also formalize the advance in a brief TEDRA, which could also serve as a receipt.

Best of luck,

Diane J. Kiepe
Douglas Eden, P.S.
717 W. Sprague Ave., Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

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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 Dalynne Singleton
Sent: Thursday, October 5, 2023 2:17 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto: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
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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
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