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Is there a way to get around gift taxes on inheritance?

A fellow caregiver asked...

My mother just passed and all her bank accounts were held jointly with me. I need to split this money with my brother but am concerned that he will have to pay a gift tax if more than $13,000.00 is given to him annually. Is there a way around this?

Expert Answer

Judy and Fred co-mediate family property and financial conflicts, and each work individually as mediators as well. Judy Barber, a mediator and family business consultant, assists clients in resolving overlapping family and money conflicts so they are better able to make sound estate planning decisions. Frederick Hertz is an attorney and mediator who specializes in resolving co-ownership matters involving families, siblings, spouses, cohabitants and domestic partners.

You are confusing the rule for gift tax reporting and the rule for gift tax payments. Under current law anyone can give away up to $13,000 per year to any person, without having to report the gift. Any gift above that amount must be reported to the IRS, but you are allowed to give up to $5,000,000 over the course of your lifetime without having to pay any tax - and the recipient of a gift never pays any tax on the gift. So unless you expect to be giving away more than $5 million in your lifetime, you can give the money to your brother without fear of any tax being due.