the us patent
Question: I am first and foremost beneficiary of a trust that my mother and my 2 daughters (ages 27 and 30) are also the beneficiaries. The balance of the trust is to be soon, and my daughters want to disclaim any interest in him, then they all go to me. My question is, what are the tax consequences of this scheme? The total value of trust is about $ 250,000. Thank you, L.
Answer: Dear L - You are thinking that there are some adverse tax consequences if your daughters disclaim their share of the trust. Although it is not clear from your question, I assume that your subsidiaries an 1/3rd interest in the trust your mother to your mother's death.
In general, if a person as the recipient of an interest in property under a will or a living trust, the interest of the west immediately after the death of the transferor, unless there is another condition that interim period must be met. The same applies to the interests, the designation of beneficiaries under retirement (including IRAS and 401 (k) plans), annuity contracts and life insurance.
There are times, however, if a recipient who does not want the interest in him or her, as is the case with your daughters. The people in this situation often feel that they can only deny the interest and this is the end of the story. They feel that way because in their minds, they have not really received anything and therefore do not really own IT.
Unfortunately, the tax laws say otherwise. As soon as the West's interest in a particular recipient, the recipient is notified, as is their own. From that moment on, the denial or exclusion of the interests of the designated beneficiary is a gift of present value of that interest for federal gift tax purposes. The gift is contingent on the beneficiary or beneficiaries in the framework of the Governing Instrument, namely the will, trust, etc.
If this is the case, then it would, as a legacy to reject someone without a gift tax? The short answer is that for many years, you can not. If it's any consolation in the way the tax laws were written, he rested in the fact that the resulting transfer could be achieved through the annual gift tax exclusion. Any excess of the annual gift tax exclusion could be protected from an actual out-of-pocket tax payment by the unified against gift and estate taxes. But it was still had pain because you have to file a gift tax return, and you will lose all or a portion of the future single against gift and estate taxes.
In order to resolve this problem, Congress amended the tax laws, which for a qualified disclaimer as part of the Tax Reform Act of 1976. A "qualified disclaimer" allowed an individual to refuse interest in a property without having to assume that a gift of interest. In this case, the individual was treated as if he or she never received it - so there was no need for a gift tax return, or to use a portion of his unified credit, or even all paying gift taxes - the pocket.
Still, to take advantage of qualified disclaimer provisions, you must meet the following requirements:
(1) The insurance must be in writing.
(2) The notice must be given to the personal representative of the real estate of the deceased or the trustee in the trust of the testator, or any other person, the ownership of property to which the interest relates not later than 9 months after the last --
(A) the date on which the transfer creating the interest in such a person, or
(B) the date on which the person reaches age 21,
(3) The person making the disclaimer is accepted, do not have the interest or any of its advantages.
(4) and, as a result of this disclaimer, the interest must be without direction on the part of the person making the disclaimer and passes either --
(A) the spouse of the testator, or
(B) to a person other than the person making the disclaimer.
So, Mrs. L, the good news is that your daughters can disclaim their interest in the trust your mother, without the transmission, a gift to you. You must, however, to meet the requirements set forth above, including the requirement that the disclaimer be within nine (9) months after the transfer was to your daughters. I assume that nine (9) months after the death of the mother, but it can also include other conditions in the trust that actually delay the vesting of your daughters' interests. For this reason, I would suggest that you are with an experienced attorney for the planning, since these requirements are unforgiving. Once the nine (9) month period has expired, you can simply no luck.
Attorney Michael Pancheri is a practicing lawyer and the founder and CEO of the Living Trust Network. You can contact him by e-mail to info@livingtrustnetwork.com. You can also contact him in the Living Trust Network Web site. The URL is http://www.livingtrustnetwork.com
Copyright 2006. The Living Trust Network, LLC.
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