Sorry, going to try this one last time but this time using numbers. Let's say I have exactly $16k in my IRA and $4k in my bank account when I die. The $4k+$16k, a total of $20k, goes to my son as I will it all to him. This money is not taxed to my estate or to my son - correct?
Now let's say instead the day before I die, I give $16k to my son's school as an educational gift. Now I have to pay taxes on it of $4k. The net is my son gets $16k for tuition but nothing else from my estate as I have nothing to give.
If my understanding here is correct this makes no sense. I thought I could use the 709 form to take an early cut of my estate exemption by the $16k so that I don't have to pay the $4k. This makes more sense to me as then my son would get the $4k when I die.
It seems clear to me that I do not understand the estate tax exemption.
