Also known as: estate and gift tax · estates and gifts taxation · estate tax and gift tax · unified estate and gift tax · transfer tax
Written by attorneys · grounded in primary & secondary sources — see below
A federal tax regime governing transfers of wealth by gift during life or at death. It encompasses the estate tax on a decedent's property, the gift tax on lifetime transfers, and the generation-skipping transfer tax on transfers that skip generations.
Emily Ellis created a trust for her grandchildren that risked generation-skipping transfer tax. She petitioned to modify the trust terms before death. The court approved the modification because it achieved her tax objectives without violating her probable intention.
After his father's death, Emanuel Escobar inherited property but faced a federal tax lien. He disclaimed the interest within nine months under state law. The disclaimer prevented the property from becoming subject to the lien for estate tax purposes.
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A court may modify a donative document to achieve the donor's tax objectives if the change does not violate the donor's probable intention. Reliable evidence such as contemporaneous emails showing a desire to avoid generation-skipping transfer tax supports the modification when it corrects an inadvertent tax result without altering substantive dispositions.
A surviving joint tenant must disclaim within nine months of the other tenant's death for the disclaimer to qualify as valid and tax-effective under I.R.C. §2518. The disclaimer prevents the interest from passing to the disclaimant for estate and gift tax purposes.
A distribution standard limited to health, education, support, or maintenance is treated as an ascertainable standard. This classification prevents the power from being treated as a general power of appointment that would cause adverse estate and gift tax consequences for the holder.
…the Code, which renders qualifying state-law disclaimers “with respect to any interest in property” effective for federal wealth-transfer tax purposes and for those purposes only.[^maj-3] Drye nevertheless refers to cases indicating that state law is the proper guide to the critical determination whether his interest in his…