"Stuart A. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

Stuart,

Thank you for the information.

--
Earl Kiosterud
www.smokeylake.com

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:
- quote -

If he never made such gifts before, there's a good chance a
court would determine that they are not gifts he "would
have" made. Again, it depends on local law and exactly how
the power of attorney is drafted.

In general a power of attorney does not give someone the
power to act as trustee of a trust. So if the property is
in the trust and it's the power of attorney that has the
gifting clause, not the trust, that is another possible
source of trouble.

- quote -

It's not improper if the gifts are legal exercises of the
power of attorney. Assuming the gifting scheme is legal
(without knowing more I'd say it's about 50/50 based on what
you've said) an agreement such as you suggest would likely
be enforceable.

But with the amount of money you are talking about, it makes
good sense to talk to a local lawyer who can look at the
actual documents and check state law as it applies to your
precise facts.

Stu

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"Stuart A. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

The Power of Attorney document specifically gives them
authority to make gifts that the benefactor would
"reasonably expected to give" I think was the wording.
Since they're in his will, this seems reasonable. This is
to start giving them the money sooner, but no more total
money. It could be argued that he'd have done this (give
the gifts and reduce the benefit) had he remained in good
mental condition.

The gifts would reduce the estate tax, as they'd reduce the
size of his estate, which is greater than the exclusion
amount ($2 Million for 2007 and 2008), and would still be
after the gifts were made. So the question is could/would
the IRS regard this as an improper way to reduce the estate
tax.

--
Earl Kiosterud
www.smokeylake.com

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:
- quote -

In that case he probably has no legal capacity to make
gifts, either. Normally a power of attorney or trust does
not give the power to make gifts for someone else unless
it's stated explicitly and clearly.

- quote -

I don't see how it matters what the IRS thinks in this
situation, unless it somehow reduces the total taxes due.
And if that happens and there is no explicity authority to
make gifts on his behalf, they will only care about the
extra tax, not the gifts themselves.

- quote -

I imagine that the agreement would be enforceable - it's
really up to the probate judge if anybody challenges it.
But since pre-death gifts in this case are not likely to be
legally valid, I doubt it makes much of a difference.

Stu

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"Stuart A. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

The benefactor is in ill health, no longer able to make
decisions. It's not certain how long he will live. There
are power of attorneys (financial) who want to start doling
out money to the beneficiaries, $12K per year. They can't
change the will. They'd like to get the beneficiaries to
agree to a reduced settlement, as a function the gifts that
have been made. The total benefit would be the same, but
some would arrive early. Will the IRS accept this? Also,
the enforceablilty of such an agreement is an issue, and
off-topic in this forum, but perhaps someone could also
comment on that.

--
Earl Kiosterud
www.smokeylake.com

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Bill <an_ordinary_guy_158[at]hotmail.com> wrote:

- quote -

How does that differ from the non-collusion method of
avoiding (not evading) estate taxes, by giving $12,000 to
each beneficiary yearly? I don't see where collusion enters
into anything.

Seth

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:

- quote -

Yes a provision can be made in a will or codicile to do just
what the OP wants, without having to get the agreement of
any beneficiary.

Stu

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:

- quote -

That opens a huge can of worms. It will be much cheaper to
execute a codicil to your will reducing this person's
bequest by the amount of the gift.

--
Phil Marti
Clarksburg, MD

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Ernie Klein <ecklein[at]pacbell.net> wrote:
- quote -

You could do that. You could even have a provision in a
will that says that any gifts you have given any of your
heirs (or gifts over a certan threshhold) are to be deducted
from that child's share of the estate.

The only problem will be determining what gifts there were
and which are to be deducted from a beneficiary's share.

Stu

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:

- quote -

I need to add this. The idea is not to have to change the
will -- just get agreement from the beneficiary and leave
the will as is.

--
Earl Kiosterud
www.smokeylake.com

Moderator:
I am not an attorney, but this sounds like a codicil that
can be added to the will without an agreement from the
beneficiary. At worst, if the gifter dies within three
years (I believe) of the gift, the gift will be added back
into the estate. Otherwise I see no tax ramifications.
Talk to your attorney.

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:

- quote -

It's possible. But don't do it just by agreement - it may
not hold up legally. State your intention in your will or
trust.

Stu

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:

- quote -

Sure. The only will that counts is the last one. The fact
that you intended to leave a bequest to this person doesn't
alter the tax-exempt gift rule.

--
Phil Marti
Clarksburg, MD

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someone[at]nowhere.com (Earl=A0Kiosterud) posted:

- quote -

In fact, one can make a gift of $12K or less to any person,
with no reporting necessary, in 2007. However, the
specification that this is part of an "agreement" might
suggest there is collusion in an attempt to evade estate
taxes.

Might be better if you just forgot the idea of making your
gifts related to "advances" on an inheritance, and view them
as outright gifts to those you love.

If, in your own mind, you occasionally adjust the
allocations of your wills and/or trusts, because of an
individual's "worthiness" based on whatever arbitrary basis
you decide upon (including how much they've "dinged" you for
while you were alive) ... well that's between you, your God
and your family.

Bill

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"Earl Kiosterud" <someone[at]nowhere.com> wrote:

- quote -

If you give the money away it won't be in the estate to be
taxed, which is very reason that many folks make such gifts;
to reduce the value of the estate so that it will taxed
less.

As far as structuring your will to take the gifts into
account and reduce the otherwise inheritance is more of a
legal question about wills and inheritance rather than a tax
question and would probably get better response in a legal
newsgroup (misc.legal.moderated).

It would probably help to say where you are located as
probate laws vary State to State.

My guess, (I am not an attorney) is you could structure a
will to give a person a given sum should you die on year 1
and decrease that amount by $12K each year you live after
that, ending up at zero should you live long enough.

--
-Ernie-

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Earl Kiosterud <someone[at]nowhere.com> wrote:

- quote -

Those are two separate things.

1. He may make a gift of up to $12K without tax consequences
to anybody, including a beneficiary.

2. He may amend his will to reduce the amount a beneficiary
gets by any amount he wants, whether or not there's a gift
made.

Seth

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May someone make a gift (up to $12K) to a beneficiary of his
will (a fixed amount) with the agreement to lower the
beneficiary's inheritance by the amount of the gift? In
effect, it would be giving an advance on the inheritance.
This would (1) let the beneficiary have some of the money
sooner, (2) reduce the basis of the estate tax (unless such
a gift doesn't get the $12K exemption). Is this
permissible? Thanks.

--
Earl Kiosterud
www.smokeylake.com

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