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crre:so what is an early inheritance?
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For tax purposes, there is no such thing.
--Peter

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Peter is correct, of course, but I've also heard the term thrown around loosely, in "as if" or "sort of" type terms.

Gifts and inheritances are different events, in that gifts happen during the donor's lifetime, and an inheritance occurs at death.

In the simplest terms I can think of, "Inheritances", and all other transfers at death, regardless of the means, by will or otherwise, are subject to the estate tax if the amount if high enough. And the amount is pretty high right now - over $11 million. BUT - that amount also includes the donor's taxable lifetime gifts, in excess of the annual exclusion amount of $15,000. So lifetime gifts can make the eventual estate tax, if there is one, higher. And gifts over the annual exclusion are reported on a gift tax return, but are not immediately payable, until the total exemption is used up. And on gift tax returns, you keep a running tab on that number.

So that's how terms like "advance inheritance" come into play, though not technically accurate.

Bill
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