| Nobody pays anything, but your brother has to file a gift tax return in 2003. It's Form 706 or 709. The first 11,000 he gives anyone is tax free; any amounts over that reduce his unified gift and estate tax credit. Remember that estate tax rule that says any estate under $1,000,000 if tax free? Well, the gifts he gives over $11,000/year/person just reduce that $1,000,000. In other words, it's no big deal. Frankly, if his estate is over a million, he should be seeing a sophisticated tax & estate planner anyway.
That said, he won't effect his estate taxes if he gives you $11,000 a year for 6 years, or if he gives $11,000 to every person in your family.
He could also donate up to $55,000 into a section 521 plan to pay for your kids' educations. The Sec 521 plan is like a Roth IRA -- the money goes into a tax deferred account and grows as your kids grow. Later, any money used to pay for the kids' college is withdrawn tax free. The plan beneficiary can be changed among siblings if one doesn't go to college or doesn't need to use all the money in the plan. Talk to a financial planner about whether it's better for you to have bro give you the cash or put $$ into a 521 plan, or some combo of both. Also, make sure the planner you consult is qualified to sell all the 521 plans. The 521 funds are run by each state and some planners only broker 5-6 state plans.
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This post does not constitute legal advice, nor does it create an attorney-client relationship. Postings are based only on the information provided and you should consult an attorney in your area before relying on information contained in this post.
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08-30-2002, 09:47 AM
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