Inheritance

[DAS]

What is the name of your state (only U.S. law)? SD

I was notified of an inheritance. . I inherited as well as my two son’s money from my grandmother and this money is in one account together. She lived in Illinois. This is where the money is currently sitting.
I do not want the money but wish to give my portion equally to my sons.
Is there a way in which I can give the money to my boys without being taxed?
Not ever having anything ever left to me I am totally unaware of what has to be done to get this done. My eldest son is 25 yrs old and my other boy is 18 yrs. I contacted the person in charged and the money is currently sitting in this account until I inform him what to do.

[tranquility]

There are two ways. *IF* the sons are the only inheritors under the law, you can DISCLAIM the money. It will then pass to them.

Or, if that is not clear by the law, will, trusts or whatever, you can take the money and GIFT it to them. If the amount is above $12,000, you would need to file a gift tax return. However, unless you have given or plan to give over $1 million in your lifetime, no taxes would be due. (At this time. Obama seems to want to target this "loophole".)

[LdiJ]

There are two ways. *IF* the sons are the only inheritors under the law, you can DISCLAIM the money. It will then pass to them.

Or, if that is not clear by the law, will, trusts or whatever, you can take the money and GIFT it to them. If the amount is above $12,000, you would need to file a gift tax return. However, unless you have given or plan to give over $1 million in your lifetime, no taxes would be due. (At this time. Obama seems to want to target this "loophole".)

Ouch, I don't like that one at all.

[FlyingRon]

Ouch, I don't like that one at all.

Good, because it's not true. Posters should avoid inserting bogus political statements in here, especially ones not grounded in fact. Both candidates are actually expousing EXPANDING the inheritance exemption over the current law.

[url=http://www.factcheck.org/askfactcheck/would_obama_tax_my_profits_if_i.html]FactCheck.org: Would Obama tax my profits if I sell my home? Would he tax my IRA? Would he tax my water?[/url]

[LdiJ]

Good, because it's not true. Posters should avoid inserting bogus political statements in here, especially ones not grounded in fact. Both candidates are actually expousing EXPANDING the inheritance exemption over the current law.

[url=http://www.factcheck.org/askfactcheck/would_obama_tax_my_profits_if_i.html]FactCheck.org: Would Obama tax my profits if I sell my home? Would he tax my IRA? Would he tax my water?[/url]

The gift tax exclusion is not the same as the inheritance exemption.

[tranquility]

So many words get said in a political campaign it's hard to know what was heard and if what was heard is part of the "official" statment of the candidate. I do taxes and pay attention when the candidates speak about them. In one speech, Obama told of his plan to lower taxes for just about everyone. He said how he was going to pay for it by increasing taxes on the wealthy and eliminating loopholes like the repeal of the estate tax and the amount the rich can give to others, to deal with the corporations who pay nothing in taxes and to reduce the inequites between those who work for their money and those who have the money do the work.

That is not a direct quote in any way and I'm just going from memory. Maybe he has "clarified" his statement or maybe he has felt it OK to not really show how he is going to pay for the free soda fountains instead of public water fountains in the cities (hyperbole meant to indicate there are more spending promises then revenue "enhancements" in his plan), but, when one party calls it a death tax and has worked to repeal it, and the other an estate tax and who does whatever it can proceedurally to prevent a vote on renewing current law after the sunset provision, one can determine what the probable results will be no matter what is listed on the enhanced, clarified, focus-grouped plan put out in the hope of getting more votes and not losing them.

(I agree with LdiJ they gift and estate are not the same, but they are related and were in the speech I heard.)

[efflandt]

If you have to claim it to keep it from going to others, the annual gift exclusion is from any person to any person. So you could always gradually transfer it to them at the rate of $12,000/yr each, or if you have a spouse, the pair of you could transfer $24,000/yr to each son (depending upon the amount of money involved). Or if/when your sons have spouses a couple can give a couple $48,000/yr with no reporting.

[LdiJ]

What is the name of your state (only U.S. law)? SD

I was notified of an inheritance. . I inherited as well as my two son’s money from my grandmother and this money is in one account together. She lived in Illinois. This is where the money is currently sitting.
I do not want the money but wish to give my portion equally to my sons.
Is there a way in which I can give the money to my boys without being taxed?
Not ever having anything ever left to me I am totally unaware of what has to be done to get this done. My eldest son is 25 yrs old and my other boy is 18 yrs. I contacted the person in charged and the money is currently sitting in this account until I inform him what to do.

As Efflandt said, you could take the money and gift it to your sons gradually, at 12k a year. That honestly might be the better way to go. Both of your son's are young (particularly the 18 year old) and may not handle money as wisely as they should. If you gift it to them gradually, they will have something in reserve if they blow the initial inheritance right away.