Estate Planning/Tax question

[rocky99]

New York

I have a general question about the lifetime gift exemption. I understand the rules, amounts etc. here is the scenario..


after death an estate is valued at 30 million (5 million cash and 25 million property)
the deceased has 5 million remaining in lifetime gift exemptions.... so she plans on giving that to her son

I understand that the estate will be taxed on the remaining 25 million...lets say the tax ends up being 10 million

Is the 5 million that the son is getting under the life time gift exemption (or in this case he was paid it after death) going to be used to pay the 10 million in taxes? Or does he get his 5 million first since it is an exemption?

Thanks!

 

[tranquility]

Huh? If the gift was before death, the gift is the gift. (Absent some clawback issue.) If at the time of death, it is part of the estate.

 

[Zigner]

She wants to plan on kiddo getting that $5 million after she dies.


The estate will need to pay its bills (including tax bills) before anything is distributed.

 

[tranquility]

A gift after you're dead? That's what all inheritances are. Mom can certainly give a set amount without taxes if it is written up that way and the estate has enough funds to cover its needs. But, it will be a part of the estate and the tax "exemption" will apply to all the assets.

 

[TigerD]

Read your textbook first, then come back if you have a question. It works so much easier that way.

DC

 

[davew128]

OP, the best way to demonstrate that you understand the rules is to actually demonstrate that you know the rules.