Tax strings to deathbed gifts
Q. Are there any special tax restrictions on deathbed gifts? E.H., Kinnelon, N.J.
A. Generally, gifts that are complete are eligible for the annual gift tax exclusion and the lifetime gift tax exemption, even if they are made shortly before death. For 2016, the annual gift tax exclusion is $14,000 per recipient, while the lifetime gift tax exclusion is $5.45 million (although such gifts erode the available tax shelter for the donor’s estate). Thus, it’s relatively easy for most folks to avoid gift tax through these two breaks. Caveat: Under a special rule, a gift of a life insurance policy within three years of death is thrown back into the decedent’s taxable estate.
Tip: Coordinate all gifts as part of your estate plan.
Medical exception for nondependents
Q. Can I count medical expenses paid for my 75-year-old mother if she isn’t my dependent? B.K., Chagrin Falls, Ohio
A. Possibly. To qualify f...(register to read more)