Are gifts made by will subject to donor's tax?

Are gifts made by will subject to donor's tax?

• A. Yes, they are taxable
• B. No, they fall under estate tax
• C. Only if they exceed the annual exclusion
• D. Depends on the property's value

Answer: (B)

Gifts made by will, also known as bequests, are not subject to donor's tax because they are classified under estate tax regulations. When an individual passes away and transfers property to heirs or beneficiaries through a will, the transfer occurs at death and falls under the purview of estate tax rather than the donor's tax, which applies to gifts made during a person's lifetime. Estate tax is calculated based on the total value of the decedent's estate at the time of their passing. In this context, any gifts made through a will are considered part of that estate and are taxed according to the estate tax rules, which take into account various deductions and exemptions. Donor's tax, on the other hand, applies to gifts made during an individual's life. Therefore, any lifetime gifts are evaluated for donor's tax, but those specified in a will are not.

Gifts made by will, also known as bequests, are not subject to donor's tax because they are classified under estate tax regulations. When an individual passes away and transfers property to heirs or beneficiaries through a will, the transfer occurs at death and falls under the purview of estate tax rather than the donor's tax, which applies to gifts made during a person's lifetime.

Estate tax is calculated based on the total value of the decedent's estate at the time of their passing. In this context, any gifts made through a will are considered part of that estate and are taxed according to the estate tax rules, which take into account various deductions and exemptions.

Donor's tax, on the other hand, applies to gifts made during an individual's life. Therefore, any lifetime gifts are evaluated for donor's tax, but those specified in a will are not.