This article addresses two financial planning questions. First, it discusses the tax implications of dividing an inheritance with a sibling who was unintentionally excluded from the will. Second, it explains the challenges of switching from Medicare Advantage to original Medicare after the initial enrollment period.
Whenever gift tax es are owed, which is rarely, they’re paid by the giver. Dividing your inheritance with your brother would be a gift to him, so he would owe no taxes. You might have to file a gift tax return if the amount you give him is more than $19,000 (the current annual gift tax exclusion amount). But you wouldn’t owe gift tax es until the amount you give away over that annual limit exceeds your lifetime limit, which in 2025 is $13.99 million.
The same is true for your other brother — a gift in excess of the $19,000-per-recipient annual exclusion would require filing a tax return, but probably not paying taxes. Gifts in excess of the annual exclusion also reduce the amount you can pass free of estate taxes after your own death. If you’re a multimillionaire and likely to face these taxes, please consult an estate tax attorney.Retirement accounts, including 401(k)s and IRAs, typically have named beneficiaries that will inherit the money directly. That means retirement accounts have the same potential drawback as payable-on-death bank accounts or transfer-on-death arrangements. If you have no other assets when you die, the person who settles your estate may have to appeal to these beneficiaries to return some of the money to pay your final bills. The beneficiaries usually would be under no obligation to cooperate, however. You could name your estate as your beneficiary, but that could have some tax drawbacks so you should consult an attorney before doing so.To recap, Medicare Advantage is the private insurance alternative to original Medicare. Like other private coverage, Medicare Advantage plans have networks and benefits that can change from year to year. Original Medicare benefits typically don’t change, but many expenses aren’t covered so you generally need a private insurance supplement to pay for those costs. If you want to switch from Medicare Advantage to original Medicare after the first year, however, you normally don’t have “guaranteed issue” rights for a Medigap supplemental policy and you could pay a lot more for this important additional coverage. There is a “nuclear option” that would give you guaranteed-issue rights again, and that’s moving out of your Medicare Advantage plan’s coverage area. You have to actually move, not just temporarily relocate. But you would be able to switch to original Medicare and get a guaranteed-issue supplemental plan
Inheritance Tax Gift Tax Medicare Advantage Original Medicare Medigap Estate Planning
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