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Author: feeshdr Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121150  
Subject: are donations from an estate tax deductible? Date: 10/24/2004 2:16 PM
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I am re-posting this under tax strategies as I didn't get any response under the "Inheritence" heading
When my step-mother died this spring, her will and living trust specified that her assets be divided among the three children (myself & 2 brothers). Before taking our portions, we chose to remove a total of $60,000 from the estate as a donation from the trust to my mother's favorite charity. I expected that my $20,000 could be considered as a charitable donation from me that I could deduct from my taxable income. My brother (executor of her will) says no, the money came from the trust, and not from me. I feel dumb - I guess I should have taken my full share, then sent out the money myself for a deductible donation. What's the real scoop? Is there anything I can do now to make it legitimately deductible?
Thanks for any help!

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73869 of 121150
Subject: Re: are donations from an estate tax deductible? Date: 10/24/2004 3:05 PM
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I am re-posting this under tax strategies as I didn't get any response under the "Inheritence" heading
When my step-mother died this spring, her will and living trust specified that her assets be divided among the three children (myself & 2 brothers). Before taking our portions, we chose to remove a total of $60,000 from the estate as a donation from the trust to my mother's favorite charity. I expected that my $20,000 could be considered as a charitable donation from me that I could deduct from my taxable income. My brother (executor of her will) says no, the money came from the trust, and not from me. I feel dumb - I guess I should have taken my full share, then sent out the money myself for a deductible donation. What's the real scoop? Is there anything I can do now to make it legitimately deductible?


I'm not sure of the legality of what you (collectively) have done. The executor's responsibility is to collect the assets of the decedent, discharge legitimate liabilities and distribute the remainder to the beneficiaries. If the will did not provide for a charitable contribution, then the executor should not have made a contribution from the estate. You could file suit against the executor for mishandling the estate in the amount of the contribution and he would be personally liable for restoring the amount to the estate. Then you could contribute the $20,000 that you received from the lawsuit. It would be far easier for the executor to file the estate's 1041 documenting that the beneficiaries each received an extra $20,000 and then the beneficiaries can deduct the contributions on their personal returns. However, I am not a lawyer nor an expert on estate matters, so don't act on this advice without consulting an experienced estate/tax professional.

Ira


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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73870 of 121150
Subject: Re: are donations from an estate tax deductible? Date: 10/24/2004 3:19 PM
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If the estate was subject to estate tax, making the gift from the estate decreased the amount subject to estate tax. If it was not then taking the full distribution and making the gift directly would have been a better choice.

If their was a lawyer involved to help settle the estate, the lawyer would now the full details and could give advice.

Debra




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Author: WPatch Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73871 of 121150
Subject: Re: are donations from an estate tax deductible? Date: 10/24/2004 7:07 PM
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Unless your stepmother provided final instructions in the trust documents to provide for specified charitable deductions, the contributions would be deductible for neither estate nor income taxes. Nothing that can be done now would change that non-deductibility.

Do you have a remedy through a lawsuit? Before making distributions for which no direct provisions are made in a an estate/trust; the executor/trustee should have consulted legal consul. If you had done so, and the attorney botched answer to such a basic question, you might have a case against the lawyer. I see no point in suing executor: he is your brother-in-law, he made the same mistake all three of you made, and there is no reason to believe that he should have known better.

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Author: acm4tax Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73872 of 121150
Subject: Re: are donations from an estate tax deductible? Date: 10/25/2004 2:12 AM
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Several reponders to this thread have advised seeking the advice of an attorney. Unless the attorney is a tax attorney, I'd highly recommend that you seek advice from a tax professional. Lawyers can help you with civil law, tax professionals will help you with tax law.

Arleen

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