A Strange Planning Opportunity?

01/22/2014

Suppose that a retired man who is a widower, wants to give $25 million to his 20-year-old unmarried grandson.  If he gives the grandson the money right now, it will be subject to a gift tax and/or possibly a generation skipping transfer tax.  If he gives the grandson the money via a bequest when the widower dies, the inheritance will be subject to a federal estate tax and also a generation skipping transfer tax.

If, on the other hand, the widower does something really outrageous and were to marry his grandson and then give his new grandson spouse the $25 million, the transfer could be tax-free because of the unlimited marital deduction.

Besides any personal or moral issues, from a legal perspective, could the grandfather marry his own grandson?  In the old days, the answer was an obvious “no.”  A man could not marry another man. How about a grandfather marrying a granddaughter?  At least in Massachusetts, there is a law preventing a grandfather marrying a granddaughter.  The law states:

No man shall marry his mother, grandmother, daughter, granddaughter, sister, stepmother, grandfather’s wife, grandson’s wife, wife’s mother, wife’s grandmother, wife’s daughter, wife’s granddaughter, brother’s daughter, sister’s daughter, father’s sister or mother’s sister.

However, now that Massachusetts recognizes same sex-marriage, that above law would not directly prohibit a grandfather marrying a grandson (presumably because the law was enacted before same-sex marriage was allowed).  This would not be an issue in Missouri, because same-sex marriages are not allowed.  But would it work in another state that does allow same-sex marriage and has laws similiar to Massachusetts?  Who knows.  Interesting from a legal perspective, but very strange.