Can you force a grandchild to take a drug test in order to receive an inheritance? Insist your heirs use trust funds only for tuition at your alma mater? Make sure your wife’s future husbands can’t run through money you worked hard to earn?
In many cases, the answer is yes—you can, in effect, control your heirs from the grave.
The issue of what you can give away and how is especially relevant now because unusually favorable estate- and gift-tax rules are set to expire. The “exemption” for both—which is the amount of assets a taxpayer can transfer to others, tax-free, either at death or through gifts while alive—is now $5.12 million per individual, and twice that for a couple. The top tax rate on amounts above that is 35%.
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