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,

Labels: Gifting

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 4/22/2008 11:12:00 AM Send this post: