Asked by caleb
Tanya has money that she wants to leave to her grandchildren after she dies, but she doesn’t want them to have to pay an inheritance tax. What is the BEST way for Tanya to leave money to her grandchildren tax-free?
Put all of her money into a 401k.
Start gifting each of them $15,000 per year now.
Put all of her money into stocks and bonds.
Start gifting each of them $25,000 per year now.
All Answers 1
Answered by
GPT-5 mini
AI
Start gifting each of them $15,000 per year now.
Reason: $15,000 is the annual gift-tax exclusion (per recipient), so Tanya can give that amount to each grandchild tax-free and reduce her taxable estate. Putting money in a 401(k) doesn’t avoid estate/gift tax and distributions are taxable to the beneficiary; gifting $25,000 would exceed the annual exclusion and could trigger gift-tax reporting/use of lifetime exemption.
Reason: $15,000 is the annual gift-tax exclusion (per recipient), so Tanya can give that amount to each grandchild tax-free and reduce her taxable estate. Putting money in a 401(k) doesn’t avoid estate/gift tax and distributions are taxable to the beneficiary; gifting $25,000 would exceed the annual exclusion and could trigger gift-tax reporting/use of lifetime exemption.
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