I am the executor of my mothers estate and sole beneficiary…

Question

This answer was rated:

★★★★★

I am the executor of my mothers estate and sole beneficiary…

I am the executor of...

I am the executor of my mother's estate and sole beneficiary in her will. I do have a half-brother who was abdopted out as a baby. I'm the beneficiary of two annuitites that are not subject to probate and I want to renounce them. I was told if I renounce them they go directly to the estate and would pass to the next heir as if I had died before my mother. Is this correct? My question is who would end up paying the income taxes on those annuities because they are subject to tax and would they be subject to a gift tax or would it be considered inheritance?

Show Less

Ask Your Own Estate Law Question

Answered in 3 minutes by:

7/1/2014

Estate Lawyer: Ely, Counselor at Law replied 5 years ago

Ely, Counselor at Law

Category: Estate Law

Satisfied Customers: 103,615

Experience: Fully licensed attorney in Texas in private practice.

Verified

Hello friend. My name is ***** ***** welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my reply.

I am very sorry for your loss.

Can you please tell me whether or not the annuities have a "second" beneficiary if the first one (i.e. you) renounces them, or, you have passed by the time the annuity is to be paid out?

This is not an answer, but an Information Request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.

Customer reply replied 5 years ago

No, there is no other beneficiary on the annuties. My goal is to get the money to my half-brother without having to pay the income taxes myself.

Customer reply replied 5 years ago

This is what I was told by another attorney. This information is incorrect?

"Under the Texas Estates Code, you can disclaim an annuity, even though it’s not part of the probate estate. If you do so, it will become part of your mom’s estate, and will pass under your mom’s will as if you had died before her (meaning it will go to your only surviving sibling)."

I just need to know who is correct please?

Estate Lawyer: Ely, Counselor at Law replied 5 years ago

Hello,

Ah, I see.

I did a little digging. Under Texas law, a renunciation of an interest will have that person treated as "dead" for all intents and purposes.

The problem is that "in this section “beneficiary” includes a person who would have been entitled, if the person had not made a disclaimer, to receive property as a result of the death of another person by inheritance, under a will, by an agreement between spouses for community property with a right of survivorship, by a joint tenancy with a right of survivorship, or by any other survivorship agreement, account, or interest in which the interest of the decedent passes to a surviving beneficiary, by an insurance, annuity, endowment, employment...."

See here.

So even if the annuity is not part of the estate, if one disclaims it, one could be treated as though they had passed for the intents of THAT GIFT even if it is then passing to the estate and to the estate's sole beneficiary (i.e. you). Without you, the next individual is the brother.

But this becomes subjective. If the brother DOES NOT WANT the money or does not object to you still claims it in probate, it MAY BE CLAIMED. Also, a good attorney can still make a case to get the annuity anyhow. So it really depends on a case by case basis.

Please note: I aim to give you genuine information and not necessarily to tell you only what you wish to hear. Please, rate me on the quality of my information and do not punish me for my honesty. I understand that hearing things less than optimal is not easy, and I empathize.

Gentle Reminder: Please, use the reply button to keep chatting, or rate positively and submit your rating when we are finished. You may always ask follow ups at no charge after rating.

Ely, Counselor at Law

Category: Estate Law

Satisfied Customers: 103,615

Experience: Fully licensed attorney in Texas in private practice.

Verified

Ely and 87 other Estate Law Specialists are ready to help you

Ask your own question now

Was this answer helpful?

Yes

No

How JustAnswer works

Describe your issueThe assistant will guide you

Chat 1:1 with an estate lawyerLicensed Experts are available 24/7

100% satisfaction guaranteeGet all the answers you need

Estate Lawyer: Ely, Counselor at Law replied 5 years ago · Answer 1

Thank you.

I was told if I renounce them they go directly to the estate and would pass to the next heir as if I had died before my mother. Is this correct?

NO, incorrect.

For the sake of clarify, I will answer as though both annuities are one annuity.

Should the beneficiary of the annuity decline the gift, the gift IS paid out to the estate.

But then, the estate has YOU as the sole beneficiary. So you would STILL be the beneficiary of that money. It is just that the money would simply have an "extra channel" to go though. Wherein originally it would be ANNUITY -> YOU, now it would be ANNUITY -> ESTATE -> YOU (per the will).

My question is who would end up paying the income taxes on those annuities because they are subject to tax and would they be subject to a gift tax or would it be considered inheritance?

Statewise, Texas state tax equals the state death tax credit allowed on the federal return, so no additional additional tax liability is created, tax-wise, on state level. Tex. Tax Code Section 211.051.

Federally, this depends on how much is being gifted. See here. Up to a certain amount is not taxed, and even if it is, the estate pays it, not the receiving party.

Whether or not it is more beneficial to receive the gift straight via annuity or via the estate depends on how one files their taxes - a creative CPA/tax preparer can make it more advantageous either way, so it depends on them. One should check with their tax professional, as it depends on the rest of the tax filing.

I hope this helps and clarifies. Gentle Reminder: Use the reply button to keep chatting, or please rate and submit your rating when we are finished. You may always ask follow ups at no charge after rating. Kindly rate my answer as one of the top three faces and then submit, as this is how I get credit for my time with you. Rating my answer the bottom two faces does not give me credit and reflects poorly on me, even if my answer is correct. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith.

I am the executor of my mothers estate and sole beneficiary…

How JustAnswer works

JustAnswer in the News:

What Customers are Saying:

Meet the Experts: