Anyone know if a husband giving assets titled only in his name to his wife would be subject to the gift tax limit?
Normally, there is no tax impact on spousal gifts. There are different rules if your spouse is not a citizen.
FYI, there is no gift tax. Gifts up to $16,000 (current annual exclusion) are not reportable. Gifts in excess of the exclusion amount are reportable on form 709, and one can pay current taxes if one wishes. If current taxes are not paid, one’s estate tax exclusion, currently $12 million, will be reduced by the amount of lifetime gifts that exceeded the annual exclusions. The $12 million exclusion was part of the 2017 tax bill and is scheduled to revert to about $6 million in 2026. Bequests to one’s spouse are also not subject to any taxes.
I will soon inherit half of the IRA of my mother. As gratitude for my wife helping in my mother’s care, I wanted her to have at least $100,000 of the IRA. She would be forced to withdraw every year for income at a somewhat lessened rate.
My choices are to receive the IRA in my name then transfer some to her, or let her receive it directly from the estate. Just wondered what the tax implications would be.
From the little reading I’ve done, If it’s a traditional IRA whoever inherits has to pay the income tax. It can be spread out over some time depending on the age of the recipient. Certainly no expert on the matter.
Did your mother designate beneficiary(s) on the IRA account at some point prior to her passing?
Good point. I will have to check on this. In her will she specified us two kids will split it 50-50, but I am an executor, and don’t see why I can’t take 40% and my wife 10%. Unless it is specified with the brokerage firm, like you point out.
Designated beneficiary(s) on the IRA account will generally override will instructions.
I think you could remove the word generally from your statement. A named IRA beneficiary will receive the IRA and that will override any will bequest because the IRA is not part of probate. The beneficiary need only present a death cert to the administrator. All inherited IRA distributions must now be made within 10 years of inheritance and, if a traditional IRA, all distributions are taxable to the recipient (assuming all dollar were pre-tax to the decedent).
Thanks. I knew any distributions would be taxable, but did not know they had to be made within 10 years.
That started recently.
If you have the option to give your wife the $100k directly from the IRA that would be your best option, the money won’t be taxed and will grow tax free until she withdraws it.
How do you give someone $100K from an IRA without it being taxed? She will be 59 1/2 next year and plans to start withdrawing some anyway.
You said “My choices are to receive the IRA in my name then transfer some to her, or let her receive it directly from the estate.”. If she received it directly from the IRA she’d only pay taxes when she takes a withdrawal, if you withdraw $100k and gave it to her you’d pay taxes on it.
The only way I can think of is to have IRA holder change the beneficiary. Distributions from an inherited non-spousal IRA taken before 59 1/2 are not subject to the 10% penalty.