Parties' implied intent negates transfer of home

Article Abstract:

The Tax Court ruled in Maxwell, 98 TC No 39, that the transfer of the decedent's house to her son cannot be considered a genuine sale for full consideration, therefore the full value of the property would have to be included in the decedent's gross estate as required by Section 2036(a). Although efforts were made to make the transfer take on the characteristics of a sale, the Court carefully examined the relationship between the contracting parties and concluded that there was an implied agreement between the two that the decedent would continue to own and enjoy her house until her death, thus making Section 2036(a) enforceable. The Tax Court's decision was also influenced by the fact the decedent did not receive the full sales price of her house because she forgave a part of the sales price and sizeable part of the mortgage obligation.

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Timing estate distributions to lower income taxes

Article Abstract:

Estate taxes can be reduced by through careful distribution planning. Estate taxes are influenced by the timing of the distribution and the termination, the type of distribution, and the selection of the beneficiaries. Beneficiaries are taxed on the distribution from an estate up to the amount of the distributable net income (DNI). Beneficiaries are not taxed on property distributed in excess of DNI. Distributions to beneficiaries are not taxable if available deductions offset capital gains or ordinary income. The estate is considered to be a separate taxpayer if all of the DNI is not distributed. The top tax brackets of the beneficiaries and the estate can be equalized by distributing income to beneficiaries in low tax brackets.

Distribution of decedents' estates, Beneficiaries

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Disclaimers can adjust tax consequences to reflect post-mortem changed circumstances

Article Abstract:

A properly executed gist or bequest disclaimer compatible with Section 2518 of the Internal Revenue Code will result in considerable estate tax savings for the intended recipient. Post-mortem estate planning conferences should include discussion of gift disclaimers and renunciation of inheritance and the economic effects.

Estate planning, Gifts, Disclaimer of gifts, Renunciation of inheritance

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