Will the money from the sale of my mother's home be considered an estate gift, even though she is still alive, since I am the recipient in her will?

I am the recipient of my mother’s cabin in her will. She just sold the cabin, and she intends to give the amount ($227,000) to me while she is still alive. Will this be considered an estate gift, even though my mother is still alive? Will I be responsible for taxes on the amount? 

Estate Planning, Taxes
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You Mother may have wanted to wait for you to inherit the property so you would then have gotten a step-up in basis and no capital gains would have been due.  Under this scenario, your mother will have to pay capitals gains on the appreciation from her cost basis.  So if she paid $100k, then there is a gain of $127k of capital gains to pay at her capital gains (not income) tax rate, usually between 15% to 20%.

The good news to you is that she has a lifetime exemption of now 11 million in 2018 under the new tax code, up from 5.49 million in 2017, that she can give away estate tax free.  But she doesn't have to die to do this, she can give it away "intervivos" or "during her lifetime."  So she can give you the $227k, or the net after-tax amount, or any other amount up to 11 Mn free of any tax.  Just be sure to file the gift tax return which will be informational only, no taxes will be due.

Hope this helps and best of luck, Dan Stewart CFA®

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