No. of Recommendations: 1
One of the other boards I read regularaly is Estate Planning and the Fool Thanks Vicki, Delta. I'm pretty sure I have this straight now. If MIL wants to give more than $12,000 (whether we need/want the money or not), she (or her accountant) needs to file the gift tax form. She does not have to pay the tax, if on the form she uses the lifetime unified exclusion. However, if she leaves close to whatever the estate tax exclusion amount is at the time of her death, the unified exclusion will need to be factored in, meaning estate taxes may be owed. It's basically a way of upfronting the estate while the person is still alive, and is probably helpful if people need the money. In this case, the question is whether MIL feeling good about giving an anniversary present outweighs the hassle. I guess as long as her accountant is told to fill out the form, and since some accountant (not me, that's for sure) will have to do the paperwork after MIL dies, anyway, the real issue is just making sure she knows a form needs to be filled out. We decided we probably will pay slightly lower taxes on the interest (same federal bracket, slightly lower state taxes).
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