Quote:
Originally Posted by ElDiabloJoe
My neighbor up north is an elderly woman. She has three adult children and wishes to split her estate up evenly amongst them. While sitting on a very healthy high 6-digits in various savings accounts and a paid off house, she is also sitting on an ever climbing 900,000 in investment funds with a large national advising firm.
While she understands she can give $18,000 a year to each without penalty incurred by any party, the is entertaining the idea of disbursing her 900,000 prior to death. This is due to her concern about the way the world is going, the wars, economic instability, dollar de-valuation, inflation, etc.
While under Trump there was something about up to 20 Million could be inherited without tax or fee consequence, she asked me about whether or not she could disburse the 900,000 without incurring any fees or tax consequences to her or the recipient children.
My amateur opinion is that the $300,000 each would be a taxable income event unless it were inheritance doled out after she passed away. That would cost each recipient approximately $65,000 in taxes (assuming combined Fed and State rate of 25%).
Are my initial thoughts on this accurate, or are there additional considerations and fiscal dynamics that would be at play in her scenario?
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If she has 3 people she wants to split the estate with, she can arrange her accounts plus house into fairly equal parts, then add each person to one account as a beneficiary. Any account including checking and savings can have beneficiaries including the deed of the house. This would keep these accounts out of probate court and avoid state estate/inheritance taxes.In PA my brother and I paid 4.5% when my mom passed. All states are different. This is PA rules:
4.5% for transfers to direct descendants (lineal heirs), 12% for transfers to siblings, and 15% for transfers to other heirs
I got all this info from Dean and Dean here in TV.
BTW, giving the $300k to each prior to her death, she will pay regular income tax on the full value… not a good idea. Consult a family law attorney…