[WSBAPT] Gift / Disclaimer of Asset to Child

[Joshua McKarcher]

Peter,

Sometimes writing it all out is all it takes. You've nailed it. Assuming all is as you say, it is by far simpler to have Bob inherit; document the adjusted basis on inherited half (and of course his existing basis in his half); gift the entire thing to Anyone He Wants To; make sure they have that documented basis information (because they receive carryover basis); ensure he files the federal gift tax return that will surely apply to his gift of the entire interest (at FMV, notice, not basis, because something here must be complicated); and then move on with life.

The inheritance and the gift are both exempt from REETA, yes.

Good luck!

All the best, Josh

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Peter D. Haroldson
Sent: Thursday, October 30, 2025 3:57 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Gift / Disclaimer of Asset to Child

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Hello:

My client ("Bob") is the PR and sole heir/beneficiary of his mother's estate.  There is no surviving spouse and Bob has no siblings.

Mom's will (after some small cash gifts) gives Bob the residue of her estate.  If Bob predeceases her, the residue goes to Bob's wife ("Jane").  There are no further contingent beneficiaries listed in the will.   Bob and Jane have two children.

The estate's main asset is a ½ interest in real property, which will go to Bob under the terms of the will.  Bob (personally) owns the other half.

Bob wants to gift this entire property to one of his children ("Child 1") but not the other ("Child 2").  Child 2 has minor children.

As I understand it, if a beneficiary disclaims an interest in an estate, they cannot direct where it goes; it's treated as though the disclaimant predeceased the decedent.  So if Bob disclaims, the estate's interest in the house goes to Jane.  If Jane also disclaims, then the house would go in equal shares to Child 1 and Child 2.  If Child 2 also disclaims, then the minor children would inherit.

It appears that the only way to get the Estate's interest in the house to Child 1 is for Bob to receive it himself, and then gift his entire interest to Child 1.

Neither transfer (estate to Bob, Bob to Child 1) appears taxable under WAC 458-61A.  Child 1 may lose the potential for a stepped up basis on Bob's half of the property at Bob's death, but this is mitigated somewhat as the real property was purchased only 4-5 years ago.

After writing this message, I feel like I've overthought this and I am looking for a problem that doesn't exist.

Do any of my learned colleagues see a downfall to this approach?  Thank you in advance.

Peter D. Haroldson



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