Three-Year Rule

The time limit for an apology after a terrible wedding toast? How long you can wait before returning that swimsuit you borrowed?

Nope. It's actually a stipulation in the tax code dealing with estate law.

Specifically, the three-year rule states that any gift given within three years of someone's death gets counted as part of the person's estate. So...if your grandma gives you her precious diamond ring in January and then kicks the bucket in June, the value of that ring gets rolled up into her estate. Depending on the size of grandma's overall estate, it can increase the taxes that have to be paid.

The purpose of the rule is to prevent high-net-worth individuals (the kind that might get hit with a hefty estate tax bill) from just giving away their stuff wholesale once they hear a terminal diagnosis. The three-year rule is a way to prevent inheritance tax evasion.