Will my wife and her sister have to pay taxes on the inheritance they passed along to my daughter?

August 9, 2004

From:  John
Date:  Mon, 19 Jul 2004
Subject:  Gift Taxes

My wife and her sister inherited a home from their father. Our daughter lived with her grandfather three years ago to take care of him. My wife and her sister decided she should share in the inheritance, so they gave my daughter 1/3 share. Then my wife decided to give my daughter her share. My daughter received 2/3 and my wife's sister 1/3. My wife wants to know if she will have to pay any taxes.

Answer

Date:  Fri, Jul 30, 2004

Hello John,

Your family needs to see an attorney who specializes in administering estates and trusts. If your daughter is the only heir for you and your wife, you and your wife might be able to make a disclaimer to avoid tax on the transfer of her share. Her sister probably has made a taxable gift to your daughter. The tax effect depends on the value of the inheritance. Move quickly because the disclaimer has to be made within 9 months after your father-in-law's death.

Good luck!
Mike Gray

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