‘I’m already feeling guilty’: My uncle is leaving me a large inheritance, but excluding my siblings. Should I gift them money every year, or set up a trust?


Dear Quentin,

I soon have to inherit a significant amount of money from an uncle with whom no one in my family still speaks; I am the only one who has kept in touch with him. While it may seem a little grotesque to think about money while someone is on their deathbed, this is a big enough sum that I have to plan how I will save / invest it.

I have two brothers who are not included in the inheritance. However, once my uncle dies and I inherit the money, I would like to “share love” with my brothers, with whom I am very close. I feel that this money is not earned and I already feel guilty because I receive this money and they do not, especially because a sister has financial problems.

If you gave them part of the inheritance, what would be the best way to do it? I would like to avoid paying taxes again, as I will pay inheritance taxes. I could give them annual amounts, but I don’t want it to look like I’m showing that money on their heads; would a trust be more appropriate? Mostly because my sister in trouble is not managing her money well.

Thanks for your help.

Sharing Love

Dear sharing,

You are a good sister. Thank you for your thought and for planning ahead. In the meantime, make no promises to your brothers or to yourself.

You feel guilty enough to inherit that money while your two sisters stay out of the cold; don’t feel guilty about giving it away too. If any of the brothers protested the way they received the money and felt that you were “lording” over them or somehow making them feel “less than”, they could always turn it down. You can’t control how other people react or feel, so don’t try. You can only control how you feel. The blame should not even be on the table.

Trusts are usually a good option when you want to save on wealth taxes. For example, an inflation adjustment has raised federal real estate taxes to $ 12.06 million per individual, or $ 24.12 million per couple by 2022, but some states are less generous while others (bow, Florida) They have no property tax. In your case, your siblings should pay taxes on the income they receive from any of the trusts you set for them during your lifetime.

Start low and go slow.

Trusts are mainly used for income tax planning, property protection of the trustee or beneficiaries, long-term care planning and / or protection of children or grandchildren with special needs, among others. other uses. Trusts can also be complex and costly to set up and maintain. Given what you say about your sister’s circumstances, you are likely to pay a lower rate on any distribution of the trust. The same would obviously apply to children in a similar situation.

Start low and go slow. In 2022, the annual gift tax exemption increased to $ 16,000 per donor / recipient, more than the $ 15,000 of 2021. Annual gifts are not deductible from your income taxes and are not considered income for to the recipients. Gifts made directly to a health care provider for a friend or family member and directly to an educational institution are exempt from gift tax. Explain that for tax reasons it is preferable to have a steady income from your uncle’s property (rather than yours).

I think what you are doing is noble and a welcome change of pace for this column. Some members of the Facebook Moneyist group had less magnanimous opinions about your situation. One wrote: “Your uncle excluded your brothers from his will because he has nothing to do with them. You should respect their desire not to give them their money. “Another said,” Don’t give them a penny. “Another asked,” Do you need another brother? “

All right, once your uncle is gone and the money is in your account, it’s your loot, and you can distribute it as you see fit.

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