[ElDiabloJoe]

Originally Posted by manaboutown

She needs to talk this over with an estate attorney - or three and perhaps a financial advisor. This scares me. If her assets were ten times as much I can see her advancing some funds. She could burn through $900K in assisted living if she requires it. She should definitely refrain from giving away appreciated assets during her lifetime because under current law they will receive a stepped up basis to her heirs upon her demise. Question: How is she cognitively?

Cognitively she is pretty sharp. Mid-90's and has not only a low 5-digit monthly pension income, but also paid lifetime medical insurance AND a long term care insurance policy.

I appreciate the information about the basis step ups, that would be very important. She has promised she would speak with her CPA. I envy her position, but glad I don't have to make her decisions.

[manaboutown]

Originally Posted by ElDiabloJoe

Cognitively she is pretty sharp. Mid-90's and has not only a low 5-digit monthly pension income, but also paid lifetime medical insurance AND a long term care insurance policy.

I appreciate the information about the basis step ups, that would be very important. She has promised she would speak with her CPA. I envy her position, but glad I don't have to make her decisions.

She is exceptionally fortunate in many ways. I am happy for her.

[kkingston57]

Originally Posted by Bogie Shooter

She should ask a CPA.

Agree and/or a tax attorney.

[retiredguy123]

Originally Posted by Bill14564

I don't think a person could live long enough or have enough children to give away $1B in chunks of $18,000/child/year. But yes, I understand the point.

The basic exclusion calculation was hard to find. The IRS says gift tax yes, unless no, but maybe yes, except for basic exclusion, which was increased in 2018, but significantly decreases in 2026, and then is only explained on the form but is explained in IRS-speak which is barely intelligible. Ultimately, it looks like you are correct but it sure isn't easy to figure out.

First of all, the recipients do not need to be your child. It can be anyone.

The official name is the "Unified gift and estate tax". Gifts are made before death and your estate is the amount left over after death. But, it is all included into one tax liability. The $18,000 annual exclusion only applies to gifts made while you are alive. But, you can gift more than $18,000 per recipient as long as you don't exceed the total estate tax exclusion during your life, which is currently $13.61 million.

[Boomer]

My first thought when I read the question is whether this giveaway is being suggested by the heirs.

For those who have reached a point where they have money to give away, they can always give away some for certain circumstances like helping with a down payment on a house or buying a car or making a dent in a grandchild’s tuition or kicking in for a remodeling project. It is nice to see your money work for those you love, but I would NOT just hand it all over.

Besides, a million is not what it used to be. Go slow on this one. Line up the ducks.

Boomer

[LuvtheVillages]

As I remember from when I worked in a private school, she can pay the tuition for a grandchild (or great grandchild) and it does not affect any gift tax limits, as long as it is paid directly to the school.

Also, she can gift $18,000 to a child and another $18,000 to the child’s spouse annually.

[CoachKandSportsguy]

Originally Posted by retiredguy123

I would never advise someone with a net worth of over $1 million to endeavour to become eligible for Medicaid.

What you don't know is how long that million will last in under different scenarios, and under certain scenarios, a person with a million can end up on medicaid if the assets aren't maximized for income to offset the rising costs and the person lives long enough. My mom has burned through over $300K in three years in a dementia locked facility, and will go through $500K in another 3 years. . in 4 years from now that million is zero and now she is on medicaid. The hospital only allowed her to be released on hospice, but the will graduate from hospice this spring. . . you just don't know. If I had opted to have 24x7 nursing care at home, that would have been $600K over 3 years, and then in two years, she would be on medicaid, in a locked facility.

I worked with someone whose father is on medicaid for dementia. His father lived with the colleague in his home. Medicaid paid for his living expenses, but he was not in a nursing home or anything like that. Too many pre conceived notions about certain outcomes. Now he didn't have a million, but he lived as normal a life as he was able to do whatever he wanted while living in his nephews house.

People who put all their money in medicaid untouchable trusts, certain types of irrevocable trusts, are also eligible for medicaid support.

What the decision comes down to is:
how do you value your money?
how do you think/feel about not depending upon it but give it to family members who can use it productively when they need it more than you do?
How long do you think you will live and how do you think you will die? (impossible to answer but worth a try)
If you can't live by yourself, are you counting on your offspring to take care of you? If not, who is going to take care of you?

My parents saved most of theirs and seldom helped out any family members with money.
My wife's parents gave away most of their money to their children to use when the parents didn't need the money.

Everyone is different, and there is no one right answer, there are scenarios to plan for or not if you choose.

Interesting discussion for sure to listen to different responses on how people think about the future, and the future is always uncertain, sometime more uncertain than at other times.

[bobeaston]

Ask a 100 of us and get 100 different answers.
Go get a legal answer, advice, and any documents that might be needed, from Amy Pittman at Pittman Law right around the corner in nearby Oxford.

[gettingby]

Why not make a loan to each of her children that is of course forgiven at time of death?

[CoachKandSportsguy]

Originally Posted by bobeaston

Ask a 100 of us and get 100 different answers.
Go get a legal answer, advice, and any documents that might be needed, from Amy Pittman at Pittman Law right around the corner in nearby Oxford.

Thanks for the anti thread comment authority-biased answer, but we prefer to discuss the issues prior to discussing it with a professional so that we have some idea of what the concepts might be to discuss with a professional. Its like studying up with buddies in high school prior to a presentation or quiz.

discussing and acting are two independent activities, both or just one can happen. . and if you read carefully, the OP isn't going to spend his money on other people's problems.

[Cuervo]

Look though I'm sure the information you have been given on the site is with good intention and maybe helpful.
But I would strongly suggest you go to your attorney and/or your accountant if you have either or both.
The situation you are in is common here in The Villages.

[Janie123]

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?

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…

[CoachKandSportsguy]

Originally Posted by Janie123

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

What is described here is state inheritance tax, which is different that state estate taxes.
An inheritance tax is imposed upon the receivers of inheritance after distribution.
An estate tax is imposed upon the value of the descendent's assets prior to distribution.

States that currently impose an inheritance tax include:
Iowa
Kentucky.
Maryland.
Nebraska.
New Jersey.
Pennsylvania.

MA has an estate tax above $2M, raised from $1M last year. That's why many people have retired to FL, to avoid taxes . .

FL has no estate taxes of which I am aware

[Gunny2403]

She can gift this to her children. File the appropriate tax form and there are no tax consequences.

[retiredguy123]

Originally Posted by Janie123

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…

Again, when you give money to someone, there is no income tax owed by either the giver or the receiver.