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Financial Planning / Tax Strategies


Subject:  inheritance vs gift Date:  5/9/2013  11:58 AM
Author:  YewGuise Number:  118591 of 127513

In order to more easily manage his finances, SIL put all of FIL's assets (< $250k) into her own name. A bad idea, as it would've sabotaged his Medicaid eligibility, but since he died (in 2011) before that became an issue, no harm done on that score.

She recently sold FIL's condo, and will send DH a check for $18k (DH's share of the net proceeds).

Question 1: Since the condo was in her (not FIL's) name, from a tax perspective this is a gift (and not an inheritance), correct?

Regarding gifts, if I'm reading right:
- Gift tax exclusion is $13k per person per year.
- For gifts over $13k, options are:
(1) Married givers to file Form 709 indicating they're "splitting" the gift. This raises the exclusion to $26k.
(2) If recipient is married, each spouse receives half, raising the exclusion to $26k.
(3) Using both options 1 & 2 raises the exclusion to $52k.

Question 2: To use Option 2, would it be OK for the check to be made out to just DH? We're in Maryland (not a community property state), if that makes a difference. So I don't know if the IRS would consider DH & me to be half-and-half recipients just by virtue of our being married, or if the check should be made out to "Mr & Mrs YG." (I think SIL would be more likely to honor a request to write "Mr & Mrs" on the check than to file a Form 709.)

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