Suppose that a retired investment banker, now a widower, wants to give $25 million to a 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 tax. If he gives the grandson the money via a bequest, when the old man dies the inheritance will be subject to a federal estate tax (and also a generation-skipping tax?) plus, depending on the state of residence, an additional estate tax imposed by a state. If, on the other hand, the widower were to remarry and give this $25 million to a spouse, the transfer would be tax-free. 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? That’s prevented here in Massachusetts by MGL Ch. 207:
Section 1. 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.
Under current laws, where same-sex marriage is legal in Massachusetts and recognized by the federal government, could the grandfather marry his grandson, give his spouse/grandson a tax-free spousal gift of $25 million, and then get a no-fault divorce after a couple of years? (if the marriage is too short, the IRS may disregard it (source))