Q: Can descendent leave a sum of money to an heir, and stipulate that the heir must pay another heir out of those proceeds?
For example, the decedent leaves $300,000 to Child A and in the will instructs Child A to pay $100,000 to Child B. Can that be done? I'm wondering if there might be tax implications because is Child B's money and inheritance or a gift, at that point?
I'm also confused as to how a decedent can compel an heir to pay other people with their inheritance.
A: It is a poor drafting technique, but it can be done as long as the will is clear on that. The amount paid from A to B, if that is what the will clearly instructs, would be considered B's inheritance directly from the decedent, and not a gift from A to B. In such a situation, A would be considered as having functioned as either an executor of the will as to that portion of the estate or the trustee under a constructive trust.
The better technique, of course, would be a will that directly sends $200,000 to A and $100,000 to B.
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