1

I believe I am well-off enough from a retirement perspective.
I was considering asking my Father to change his will so my children would get his inheritance instead of me. Skipping me.

To simplify the question:

  • I'm asking about things that pass via a will
    (Some things like life insurance don't)
  • No perceived need for a trust for the children
  • I will be alive when my Father dies, and will not contest it.
  • Just Federal considerations (since states vary)
  • This is to help me plan before talking to a $/hour attorney
    (who will write a state-specific will)

His estate may or may not be above the threshold for Federal taxation at the time of his (future) death.

Are there reasons which indicate my Father should not do this?

I don't see any (good) reasons, but I know just enough about law to know that when I think something is obvious... it often isn't.

I'm interested in hearing about things that I should think through because they are either likely or they are unlikely but have big negative consequences.

For example I heard years ago that there could be absurdly large (50%+) additional taxes, but even if that were correct (then) the tax laws have likely changed a number of times since I heard this.

Or perhaps it is a big deal if I die before he does?
(I have no reason to expect this)

3

The only time it is relevant is when an estate is subject to the Generation Skipping Transfer Tax. But, the exemption from the tax is currently (as of 2019) $11,400,000 per donor per lifetime, so if the expected inheritance is less than that amount there is not a tax issue. When I started practicing law (in 1995), the exemption was $600,000, so it affected a lot more people.

All aspects of inheritance are governed by state rather than federal law except the income tax, estate tax and generation skipping transfer tax issues. Otherwise this is permitted under U.S. law in every state (some countries, such as Mexico, only allow a child to be disinherited by a Will for dishonoring the parent in some way or predeceasing).

Many people intentionally devise an inheritance plan (in the narrow sense this would be a bequest or a devise, and an inheritance is what you receive from someone without a will, but there is also a broader sense of the word) along the lines that you are suggesting.

-1

The will would go to the state court, so the federal part does not really matter.

The taxes and such don't really change depending upon naming you or your kids.

Sorry, to be so brief, but there just doesn't seem to be any difference between you and your kids in how a will would work, because you haven't told us of any circumstances that would make that so.

  • That may be the right answer, there may not be any reason to not do it. Mentioned Federal because of taxation - there seems to be a "skip tax" regarding inheritance, but this reference talks about skipping two or more generations: definitions.uslegal.com/d/direct-skip-tax (so, it isn't relevant) – J. Chris Compton May 8 at 17:32
  • There is a skip tax, but the money would still be under the inheritance tax if left to you, so either way it is taxed. – Putvi May 8 at 17:38

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