[coleprice]

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?

Your neighbor should check with a Probate Attorney and a CPA in her state who can advise her of both Federal and State Tax implications. Responses on this forum are "opinions" only, but your neighbor needs the FACTS.

[Johnsocat]

Couldn't she divide the cash assets into 3 accounts and have intended recipient be joint owner on the account?
Upon her passing the joint owner becomes the primary?

[Lea N]

As CoachKandSportsguy said her best bet is to see an elder care attorney. They are worth the time. The laws are constantly changing and the attorney would probably tell her to check in every few months to make sure that everything is good and let her know if any changes need to be made.

[Guzzel]

If your neighbor is interested in maintaining generational wealth, she may want to consider establishing a Trust so that it specifies the conditions that family members may access the money. However, simply dividing it up among the kids may in fact be a quick way to rapidly deplete the entire amount.

The following article is an interesting read to get a better idea of how wealthy families maintain their wealth over many generations.

How Wealthy Families Use Trusts to Protect Their Wealth - Ken Majmudar

[dougjb]

Seeking financial advice on this forum from anonymous sources (most of whom could not identify the front of a one dollar bill) is tantamount to extreme foolishness.

Along those lines, here is my best advice: "She should give it all to me. I will see that she is taken care of during her life and that her kids will get the remainder." Signed Wile Coyote.

[virtue51]

She really needs to consult with an elder care attorney -- if she needs to go into a nursing home -- it can be challenging because they look at your income and assets over the last several years -- in addition, a financial advisor with an understanding of the financial impact to her and her beneficiaries needs to be carefully considered - this is not the forum for advice -- qualified elder law attorney and financial advisors would be able to view her entire situation

[sallyg]

Refer her to a professional.

[Wondering]

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?

Why isn't she/you asking her financial adviser or attorney?

[Rich Iwaszko]

My question exactly...............the joint owners could draw from the accounts now...........BUT, there has to be a lot of trust between the persons........could buy them houses with both names on the deed and could buy cars and payoff debts and nothing is reportable. Its doable............. I guess its a good position to be in...blessings


.no government mtninvilved also could payoff all the kids debts

Originally Posted by Johnsocat

Couldn't she divide the cash assets into 3 accounts and have intended recipient be joint owner on the account?
Upon her passing the joint owner becomes the primary?

[Haggar]

A gift tax return is required when the $18,000 is exceeded. It's not optional as indicated.

Gifts carry with them the donor's basis; inheritances carry the fair market value at date of death ( or six month later if elected).
Give cash away; not stocks, bonds, houses, land..... So maybe it's not a good idea to give away the entire estate before death.
I've had residences inherited that when sold threw off a tax loss.

A couple could give $72,00 a year to their married child and spouse if done right.

Confirmed no tax of gifts to the receiver, only a requirement to file a gift tax return if the annual limit is exceeded.

Loans are not the way to go. A loan would require interest to be paid - taxable income to the lender, probably no tax deduction to the borrower.


Titles to property are critical - whether held in joint name or joint tenants with right of survivorship or other.

From a CPA

[tbatterman]

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 you gift more than the annual exclusion amount (the $18,000 per donor per donee that you mention) you can still do it without tax. A gift is never taxable as income to the recipient. The $13.61 million that is exempt from estate tax when you die can be used during lifetime to shield gifts in excess of the annual exclusion amount from gift tax. If you gift more than the annual exclusion amount you simply file a gift tax return to show how much of the lifetime exemption you are using to avoid tax on the gift.
However, those are the rules for federal taxes. Be sure to also consider the gift tax rules of the state in which she resides. There should be no income tax on the gift there either but there may be gift tax considerations at the state level.

[jedalton]

At time of death assest get a step up in basis, to current value at time of death. So very little or no taxes would be required if held till then.

[ronda]

Originally Posted by retiredguy123

The current estate tax limit is $13.61 million. As long as her estate is not higher than that, she can give away all of it either now or after death and there will be no taxes owed by either her estate or her heirs. If the money is given as a gift, the receiver doesn't owe any tax. Gifts are not taxable income. However, there may be capital gains consequences when sold, if the gifted assets have a taxable cost basis. I would definitely recommend that she consult with an estate planner before gifting her assets.

Yes, $13.61 M is the estate tax exemption. But any beneficiary that is not class A will be required to pay inheritance tax. Also, you can give away the money before you pass away, you have to be aware of the Gift Tax Rule. For 2024, the annual gift tax limit is $18,000. For married couples, the combined 2024 limit is $36,000.

So, you want to avoid Estate tax, inheritance tax and gift tax. So your strategy depends on the value of your estate, and who your beneficiaries are.

[retiredguy123]

Originally Posted by ronda

Yes, $13.61 M is the estate tax exemption. But any beneficiary that is not class A will be required to pay inheritance tax. Also, you can give away the money before you pass away, you have to be aware of the Gift Tax Rule. For 2024, the annual gift tax limit is $18,000. For married couples, the combined 2024 limit is $36,000.

So, you want to avoid Estate tax, inheritance tax and gift tax. So your strategy depends on the value of your estate, and who your beneficiaries are.

I don't understand your post. The term "inheritance tax" usually refers to a state tax, not a Federal tax. Florida does not have an inheritance tax. If you are referring to the Federal tax, there is no such thing as a "gift tax" and there is no such thing as an '"estate tax". It is called the "unified gift and estate tax" which is a combined single tax that has a lifetime exclusion of $13.61 million. So, if you gift more than $18,000 to an individual in a tax year, you do not owe a gift tax because there is no tax called a gift tax. The only time you owe a Federal tax is when you exceed the lifetime exclusion of $13.61 million for the "unified gift and estate tax". Until then, you do not owe any Federal tax.

[OrangeBlossomBaby]

Originally Posted by Guzzel

If your neighbor is interested in maintaining generational wealth, she may want to consider establishing a Trust so that it specifies the conditions that family members may access the money. However, simply dividing it up among the kids may in fact be a quick way to rapidly deplete the entire amount.

The following article is an interesting read to get a better idea of how wealthy families maintain their wealth over many generations.

How Wealthy Families Use Trusts to Protect Their Wealth - Ken Majmudar

Glad someone in these three pages suggested it. I'm pretty surprised you're the first. My grandmother put her investments in a revocable trust, which my mom forwarded to a new one when grandma passed away. In a "more or less" and unspecific way of putting it, my sister and I already own everything my parents possess. But we can't claim it til they die. Our name is on everything, but no power of attorney to access it. As soon as they die, it automatically transfers to us. No probate, because it was always ours, and we're still alive.