End of life gifting. Any advice?

It depends on if the document allows gifting. Inheritance tax really is not an issue any longer. A couple of million (I think) is allowed before inheritance tax is payable by an heir. Not many have that problem. Best not to gift money just in case.

Who specifically wants to initiate a gift? If the individual close to death is still mentally able to make the determination to gift, he/she could direct the proxy to do so. But I'd be concerned about potential conflict of interest if the proxy makes the decision on his or her own, especially if the dying person is not able to make a gifting decision. In that situation, I think any gifting would be highly suspect as to the proxy's actions.

Another potential concern is that this transfer would be made just prior to someone's death. Are there sufficient assets in the dying person's account(s) to pay for longer care if death doesn't occur soon, and equally as important, to pay all the expenses of the last illness, manage the estate and eventually close it out?

As Glad writes, and as I understand, estate taxes don't come into play unless the estate is valued in the millions. See: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax, for these levels.

If you're thinking not about estate but rather about income taxes, that depends on the recipient's AGI when filing his/her taxes.

It used to be that a Form 709 was filed for gift taxes. That's typically prepared by an attorney. I think an attorney would be concerned about doing that for a gift made so close to death.

And I'd still be very concerned about making any such transfer just prior to death, especially if the gift would be to one person only in a family, and if there are others who wouldn't be gifted, or if there might not be sufficient assets to pay the last illness expenses and manage the estate until it's closed out.

you might want to contact a qualified tax preparer or accountant. trying to avoid something could end up backfiring in a not so pleasant way.

cjdux, in my Dad's case, I waited until Probate was signed, sealed, and delivered before I would even think of writing gift checks. Probate can take a lot of time. And there could be a lot of expenses after death.

The Executor needs to file income taxes next year for  tax year 2018 if the income/dividends/interest earned is over a certain amount, and the quarterly estimated taxes that would need to be paid. Estate funds will be used.

Get the advice of a CPA to see what are the pros and cons depending on your State laws.

Derek, thanks for the explanation. So, your parent must live in a state that still has inheritance taxes? And you're concerned about this on the individual's level, but not on the estate level since the estate wouldn't be subject to estate taxes b/c of its value?

You ask if the state or IRS might view this as tax evasion. Well, yes, I would think so. Otherwise, why wouldn't the estate be assessed and settled and disposition made to the heirs at that time?

And don't forget that you've admitted this is a concern on a public forum. I don't know if the IRS uses software similar to that of law enforcement agencies, but we all leave a cybertrail when we post.

I do see your point, but you're on thin ice when you try to anticipate what taxing authorities will or won't do.

I think only the state treasury office and IRS could answer this. It requires access to policies that none of us (except one poster who used to work for the IRS and another who's an accountant) have. Speculation would only be guessing.

I think you'd be wise to check with a tax accountant. Don't gamble on potential IRS or state treasury department actions later; it isn't worth it. I get the impression the estate has considerable worth, and if so, I'm assuming an attorney created the estate planning documents. A quick call and/or visit to him or her could help clarify your options, and there may be others of which we're not aware.

Good luck; I hope you find a good solution for this particular heir.

Thanks GardenArtist that's what I figured, but was hoping otherwise.

To answer some of the questions. The idea is to ease the burden on the heir by gifting only the amount that is below the taxable (personal income tax) amount, which is as I understand it $17,000. This amount would not put a strain on the estate and there is no one who would contest the gift. It would only be to circumvent a little of the inheritance tax. Could the government (IRS and state) see this as tax evasion? The last thing I need after doing everything right for the past 6 years is to screw up now.

I don't think a POA has that authority without consent of the one who assigned him/her. If you get their permission, then get it in writing. The next person in charge is the Executor.

Just a quick thought...an attorney might be able to suggest a structured payout to avoid taxes on an otherwise lump sum. Or if there's a trust in existence and that heir would have a (sub) trust created for him or her (this is what we've done), and assuming the Trustee has authority, that kind of structured payout might stretch the inheritance and tax obligation out over the years.