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So, my question is legality. We're talking about gifting money to someone who pays lower taxes, then (potentially) getting the money back as inheritance. The intent is not to avoid taxes—the intent is to provide Mom with security—but the result would seem to be something of a tax-shelter, albeit a minor league one.

There is nothing illegal about this.

However, it is not risk-free. The main risks are that (1) the $100,000 will be consumed voluntarily or involuntarily by the mother. As stated earlier in the thread, if she needs certain "low-income" services in the future, she will have to spend down her assets. Giving them back to splotto won't count. (2) the mother will choose to leave the $100,000 to someone else or charity or there is a large, but unknown creditor waiting. (3) Giving the $100K in one lump triggers gift tax return filing. While there may be no tax due now, it will impact splotto's ability to give large gifts in the future.

Professional advice from someone experienced with geriatric finances would be a wise investment.


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