Reply to Advising parents on how to set up will

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[quote=Anonymous]If you want to keep the house and she does not, of course she will buy her out at half of the fair market value.  It would have tax consequences for her if she did not do this. She would be giving you a gift. So let’s say half of the fair market value is 100,000. If you only give her 50,000, then she is gifting you $50,000 essentially. And she would have to pay 40% gift tax on that. So yes, you should pay her fair market value. Furthermore, it is very typical of estate attorneys to recommend that parents gift equally among their kids. What if your sister has kids later? Or even if she doesn’t it’s Moreno fair to leave her the same amount. In my family, money if left equally in trust to each child. Each child is allowed a testamentary limited power of appointment in which they can write a will leaving their portion of their trust to any of their parents’ descendants. So I don’t have kids, but I’m only allowed to leave my inheritance to my brothers’ kids. Given the fact that I am super frugal and he and his wife spend spend spend, their kids will probably inherit more from me than from them.

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