Can gifts be revoked if circumstances change?
September 10, 2023 | 55,00 EUR | answered by Fred Wittik
Dear tax advisor,
I am Sophia Reimann and I have a question regarding gift tax. Several years ago, I gave my nephew a large sum of money to help him finance his studies. At that time, I was in a good financial position and had no reservations about providing him with this financial support.
However, recently my own financial circumstances have drastically changed. Due to unforeseen expenses and an unexpected career change, I am no longer able to continue bearing this gift. My concern is that I may not be able to reverse the gift and therefore will have to continue paying gift tax, which I cannot afford.
Therefore, my question to you is: Is it possible to reverse gifts if circumstances change and I am no longer able to bear the financial burden? Are there any possible solutions or exceptions that could apply in my case to reverse the gift and avoid gift tax?
I thank you in advance for your support and advice on this matter.
Sincerely,
Sophia Reimann
Dear Mrs. Reimann,
Thank you for your inquiry regarding gift tax. I am sorry to hear that your financial situation has changed so drastically and you are no longer able to continue supporting the gift to your nephew. I understand your concern regarding gift tax and will try to provide you with a detailed response.
Unfortunately, it is not possible to reverse gifts once they have been made. A gift is a voluntary transfer that is permanent and irrevocable. Even if your financial situation deteriorates, the gift remains valid and gift tax must still be paid.
However, there are some exceptions and possibilities that could help reduce the financial burden in your case. One option would be to talk to your nephew about the situation and agree for him to repay the gift. In this case, the gift could be treated as a loan for tax purposes and the gift tax would be waived.
Another option would be to request a deferral or installment payment of the gift tax from the tax office if you are unable to pay the tax all at once. The tax office will then assess your financial situation and decide on a possible deferral or installment payment.
It is also advisable to seek professional assistance from a tax advisor or lawyer to assess your individual situation and work out possible solutions. An expert can help you find the best course of action and assist you in communicating with the tax office or your nephew.
I hope my response could be of help to you and provide you with some possible solutions. If you have any further questions or need additional support, please feel free to contact me.
Best regards,
Fred Wittik
Tax Advisor
