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Author: criser Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: Estate tax pickle Date: 9/20/2000 11:25 PM
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700k/4 = 175k. How does daughter number 1 feel about giving away 325k (500 - 175)? Or probably more because estae tax may well be paid out of remainder with estate. Will daughter 1 do so? Are other daughters willing to wait for dollars within limits of annual exclusion? If not, do they intend to somehow compensate daughter 1 for using up a portion of her lifetime credit (exclusion)?

JAFO's got it right - Daughter 1 is going to have to make taxable gifts of $325,000 in order to effect Mom's wishes. Why? Because what was the joint account is now hers. Period. The other daughters can't make her give up any of it no matter what, and no matter how much Mom wanted that to be the case.

Estate tax could probably be avoided by having Daughter 1 disclaim enough of the joint account to get the taxable portion of the estate down to $675,000 (assuming that the effect of the disclaimer would be that the surviving spouse would receive the disclaimed property - but that's not something you can know until you know how Mom's will works). Some of the rest of the disaster might also be fixed by disclaimers and maybe some gifts from the surviving spouse. But then, depending on the language of the will and the beneficiary designation of the IRA, disclaimers might not get this to the right point. If disclaimers will work, it's not going to be cheap to do it right. When someone comes to me with this situation, on top of the usual hourly fee for routine estate administration, I charge a substantial additional fee for handling the disclaimers, because it's risky business and has to be carefully customized to the situation.

What a mess! The lesson to be learned?? See a competent estate planning attorney - especially when you have a potentially taxable estate! This estate probably could have been a simple one with the right, relatively simple, estate plan
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