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Written will says one thing, spoke final request says another

I'm writing this in the first person, since it's far easier to comprehend than the real scenario.

Let's say I'm 80 with $1mil in the bank. I have two 50 something children, Paul and Mary, and a total of 5 grandkids (one grandkid from Paul, the other four from Mary). Mary is named executor of the estate.

In my will, I specify $450k to each of my children, and the other $100k to be split amongst the five grandchildren at $20k a piece. In my final days, I tell Paul "Don't tell Mary, but really I want your child to get $150k. I know Mary's kids will blow all their money on frivolous things. Once I'm gone and the will is settled, just transfer the extra money to your child."

Of course, the IRS will step in if they see someone gifting any amount over $12k, so is there a legal way to transfer the $150k from Paul to child without the IRS stepping in? It is technically an inheritance, but not one specifically mentioned in the will. I know there's a way for Paul to transfer the money based on his estate, but again, that involves a tax penalty.

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Submitted Wed, 10/06/2010 - 15:19

So you are not seeking to change what happens under the will, but merely asking Paul to take some of his inheritance and give it to his child?
Depending on the wording of the will, you may be able to achieve that end easily and without gift or income tax issue with the use of a written "disclaimer". If it is within 9 months of your death, and if Paul has not accepted any of the benefits of the asset to be disclaimed, and if Paul is not insolvent (the requirements for an effective disclaimer can be found at Section 2518 of the Internal Revenue Code and Massachusetts General Laws Chapter 191A), then Paul can do a partial disclaimer. Mary will have to know - because Paul will need to file the disclaimer with the Probate Court and Mary will actually distribute the money to Paul’s child - but the effect will be that the disclaimed property will pass as if Paul predeceased you. So if the will is worded as I think it is (hopefully the will reads “and if Paul does not survive, his share of the estate is to pass to his issue/child), then Paul’s child will get the disclaimed property directly from the estate and NOT from Paul. It is simple and clean when done properly.
 As always - my recommendation is to have the attorney for the estate draft the disclaimer so that you are sure that it is fully effective.
Attorney Peter Bernardin

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