Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for April 22nd, 2008

Estate Tax Hypocrisy

Posted by taxguru on April 22, 2008

The Kennedy Klan has been promoted to a status of as close to royalty as can be attained in this country, in spite of the fact that their fortune was amassed by Joe Kennedy through illegal bootlegging and stock fraud activities. To top it off, they have long used trusts to avoid having to pay the kinds of estate taxes that they want everyone else to pay.

This is an interesting video of Teddy explaining how they pay their fair share.

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Fairness, DemonRat style…

Posted by taxguru on April 22, 2008


(Click on image for full size)

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Tax Freedom Day

Posted by taxguru on April 22, 2008

The Tax Foundation has calculated that this year’s Tax Freedom Day is tomorrow, April 23. They’ve produced an entertaining and informative video on what this means.

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Posted by taxguru on April 22, 2008

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Posted by taxguru on April 22, 2008

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Posted by taxguru on April 22, 2008

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Posted by taxguru on April 22, 2008

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Gifting ceases with death

Posted by taxguru on April 22, 2008

Q:

Subject:  Gift tax question

Hello:  I read your blog, but could not figure out how to ask you a question.  My 90 year old mother died in 9/2007.  Prior to her death she had been gifting $12,000 per person and paying tuition directly to institutions.  The estate has not yet settled because the executor asked for an extension.  I just received my tuition bill for $11,000.   1) Do the $12,000 per person gifts continue after death, and 2) do the tuition payments continue after death?  When you answer, could you point me to the appropriate IRS literature?  Thank you,

A:

This isn’t really a tax issue that you are dealing with.  It is more of an estate settlement issue that you need to work out with the attorney and executor who are handling the disposition of your mother’s estate. Some of the exact answers will depend on the rules for your mother’s particular state of residence when she passed away.

Basically, when a person passes away, her ability to make gifts terminates at the same time.  So, the annual gifts your mother was giving you can’t continue.

however, this is when her will or living trust kicks in.  She may have left you a lump sum of money to use to continue your education or she may have designated that a trust be established for your benefit, out of which your tuition will continue to be paid.  Both of these, as well as other variations and combinations, are common estate planning scenarios.

Again, you need to consult with the attorney and executor to see how you will be affected.

Good luck.

Kerry Kerstetter

Follow-Up:

Kerry: Thank you so much for your response!  I thought that her ability to gift died with her, but I could not find anything that actually said it.  Sincerely,

 

 

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