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Should we file a Form 709?

Rocklin, CA |

My father - in - law is 98 and in hospice care . He just sold his home and wants to give each of his 3 children $ 50 , 000 from the proceeds ( which is all but $ 10 , 000 of amount ) His remaining assets are 2 savings accounts - - POD to his children and 2 small checking accounts . He will not be anywhere remotely close to worrying about gift or estate tax . My brother - in - law wants to break up the gift into smaller amounts and over 2 years to come under the max amount ( 13K ? ) for having to report the gift . He feels that receiving the full amount now and filing a Form 709 would put HIM more at risk of a tax audit . Is there any basis for his thinking this or can we just let my father - in - law give his $ 50 , 000 gift now while he is alive and file the Form 709 ?

Attorney Answers 3

  1. Best answer

    If you make gifts of more than $14k per person in any one year, you would need to file a gift tax return but there would be no gift tax due since the gift and estate tax exclusion has increased to $5,250,000 (5 million indexed for inflation)
    It depends on how the donor wants to proceed. He can give all currently since not taxable estate rather than spreading over taxable years since he is in hospice care currently.

  2. The gift tax exclusion for 2013 is $14k. In addition to the options you list above, amounts above the $14k can be given tax free for things like education.

    As to a tax audit, your bro-in-law would be reporting the receipt correctly, so I don't think the risk of an audit is high. However, recipients would owe more tax, if given the entire $50k at once, instead of spreading it out over a few years ($50k/$14k, so into the fourth year). given your father-in-laws age and health, that may not be the best option.

    Your father-in-law could leave the money in three separate bank accounts, each with a different beneficiary designation, or could put it all in one account, with all three beneficiaries listed.

    Please consult a local attorney for specific help that can save the family money on taxes.

    The above is not intended to be legal advice, but may be used for general information. Please contact an attorney for specific help tailored to your needs.

  3. I think the concerns are unfounded.

    This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website:

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