Gift Tax

[Gecko]

An individual receives a $250000 life insurance payment and decides to give his sister half of it. This person has modest income and will probably never have deal with the estate tax. Should he file a gift tax return?

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[Stuart A. Bronstein]

Gecko <pkb...@gmail.com> wrote:

> An individual receives a $250000 life insurance payment and
> decides to give his sister half of it. This person has modest
> income and will probably never have deal with the estate tax.
> Should he file a gift tax return?

Well, you certainly should file a gift tax return - that's what the
law says. I doubt there will be much of a penalty if you don't.
On the other hand you never know what the future holds, and if you
don't file a return, the statute of limitation will never run on
the gift, so the IRS could come back years from now and cause
trouble.

But perhaps it's not necessary - If your sister is your only
sibling, you have no children and your parents are both deceased,
you could do a qualified disclaimer (which has to be done within
nine months). With that, the disclaimed amount will be deemed to
have gone directly to the person it would have gone to if you had
died first - perhaps your sister. In that case no gift tax return
is required because that money will be considered to have gone to
her directly rather than through you.

--
Stu
http://DownToEarthLawyer.com

[Stuart A. Bronstein]

"D. Stussy" <spam+ne...@bde-arc.ampr.org> wrote:
> "Gecko" wrote

> An individual receives a $250000 life insurance payment and
> decides to give his sister half of it. This person has modest
> income and will probably never have deal with the estate tax.
> Should he file a gift tax return?

> ========
>
> Yes, but he may not have any tax due if he applies part of his
> unified credit.

If the recipient of the death benefit had no children, and his sister
is his only sibling (assuming their parents are not alive), then he
can do a qualified disclaimer (within 9 months of the death) and
there will be no gift tax consequences of any kind.

--
Stu
http://DownToEarthLawyer.com