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Christopher B, Esq
Christopher B, Esq, Attorney
Category: Estate Law
Satisfied Customers: 2981
Experience:  Litigation Attorney with education focus on estate planning and tax
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My husband passed away last year and his stepfather, my father

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My husband passed away last year and his stepfather, my father in law could pass away soon. I am his power of attorney for his finances and he has his Will set up for me, and his 2 grand children. Does he need to gift it to us to lower our taxes? And if so how do we go about doing that?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Christopher B, Esq replied 1 year ago.
My name is***** and I will be helping you with your question today. This is for informational purposes only and does not establish an attorney client relationship.
The first question you need to ask, is your father-in-laws estate worth over $5.43 million? If it isn't then he will not have to pay estate taxes (unless he has given away significant gifts during his life - at this point one can give away $14,000 away per person per year before incurring any gift tax). Estate and gift taxes are linked as gifts given away during life (below $14,000) if they incur gift tax are subtracted from the lifetime exclusion ($5.43 million) which means you will not have to pay taxes at the time but will have to pay on the back end if you have a significant enough estate. Beneficiaries also do not pay taxes on the amount that is distributed to them. So the answer to your question is no, whether you give it away as a gift or distribute it at death, it does not matter (with some very complicated exceptions of course).
Please let me know if you have any further questions or require any additional guidance. Please do not forget to positively rate my answer as this is the only way that I am compensated for my work.
Customer: replied 1 year ago.
Thank you so much! No, he does not have over 5 million. I'm talking about inheritance tax in NE. is that what you're talking about? Would 200,000 be taxed?
Expert:  Christopher B, Esq replied 1 year ago.
I'm sorry I as addressing federal estate tax. For Nebraska estate tax the following rules apply:
Certain relatives of the deceased person are given a $40,000 exemption from the state inheritance tax. In other words, they don’t owe any tax at all unless they inherit more than $40,000. This tax exemption applies to these family members of the deceased person:
(1) parents
(2) grandparents
(3) siblings
(4) children, grandchildren, and other lineal descendants (including legally adopted persons)
(5) any person to whom the deceased, for not less than ten years before death, stood in the acknowledged relation of a parent, or the spouse or surviving spouse of any such person
Inheritance tax is due if any of these people inherits more than $40,000. The tax rate is one percent of the clear market value of the property over the exempt amount.
Any person or organization that doesn’t fall within these categories owes inheritance tax on amounts over $10,000. The tax rate is 18%.
ertain expenses can be deducted from the value of a Nebraska estate, including:
(1)Funeral expenses, including costs for internment and a gravesite marker
(2) All expenses of administration, including attorney's fees, court costs, expenses concerning property not subject to probate, expenses related to taking possession or control of estate assets and the management, protection, and preservation of estate assets, but not expenses related to the day-to-day operation and continuation of business interests which have not accrued as a result of the death of the decedent
(3) Expenses of the last illness which were incurred within six months of death
(4) Other debts of the decedent which have been paid
(5) Any federal estate tax paid, payable, or expected to become payable, after deduction of all applicable credits, which is attributable to property subject to Nebraska inheritance taxation
It could seen that you would fit into #5 (any person to whom the deceased, for not less than ten years before death, stood in the acknowledged relation of a parent, or the spouse or surviving spouse of any such person). Do you fit under this? If not, you are not a blood relation to your husband's step farther.
If you fit into #5, I would say it is a pretty good argument that you would, then for $200,000 you would subtract out the $40,000 exemption and the base estate would be $160,000 minus any of the other deductions that I mentioned. 1% of the $160,000 would be a max of $1600 to be paid.
I am not as familiar with NE inheritance tax but it would seem that you or your father in law could gift the entire amount of his estate into an irrevocable trust. Nebraska inheritance tax is imposed on all property inherited from the estate of the deceased (including life insurance payable to the estate) passing by will or intestate succession (i.e. without a will) pursuant to Nebraska probate statutes. Gifting $200,00 would not incur any federal gift tax and would avoid NE inheritance tax.
See link for NE statute involving inheritance tax:
http://www.revenue.nebraska.gov/legal/regs/inherit.html
See link for NE forms:
http://legal-forms.laws.com/tax/form-706n-nebraska-estate-tax-return
Please let me know if you have any further questions or require any additional guidance. Please do not forget to positively rate my answer as this is the only way that I am compensated for my work.
Expert:  Christopher B, Esq replied 1 year ago.
Just checking back in, please positively rate my answer if you are satisfied.

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