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Inheritance Advice
Posted on 1/24/23 at 10:06 am
Posted on 1/24/23 at 10:06 am
My grandparents over Christmas gifted everyone essentially what would have been their future inheritance. I received $50k while my three 8 and under children received $30k each.
I already have 529's for each kid, ranging from $8-$11k per, and I throw $50 at it per kid each month. My thought was to give the kids options beyond education expenses, and perhaps have control of the money beyond them turning 18 like a UTMA would require. Was thinking I couldn't go wrong with just setting up separate accounts under my fidelity login for each kid and just dumping their share into VTI or VOO and come back in 15 years.
Thoughts on this plan? I've never been more stressed about what to do with money, the responsibility of properly handling such a generous gift from my kid's great grandparents weighs on me more than my own investment and retirement planning!
I already have 529's for each kid, ranging from $8-$11k per, and I throw $50 at it per kid each month. My thought was to give the kids options beyond education expenses, and perhaps have control of the money beyond them turning 18 like a UTMA would require. Was thinking I couldn't go wrong with just setting up separate accounts under my fidelity login for each kid and just dumping their share into VTI or VOO and come back in 15 years.
Thoughts on this plan? I've never been more stressed about what to do with money, the responsibility of properly handling such a generous gift from my kid's great grandparents weighs on me more than my own investment and retirement planning!
Posted on 1/24/23 at 10:19 am to EveryonesACoach
I thought you could only gift someone $16k annually tax-free, $17k in 2023. Outside of what to do the net amount, I believe you might owe taxes on the excess gifts over $16k. Maybe you've already taken that into account - just wanted to make sure I brought it up.
Posted on 1/24/23 at 10:25 am to EveryonesACoach
If the money was actually gifted to the kids in their name, your options from a legal standpoint are a bit more limited.
As far as the gift tax question asked above, that’s probably one of the biggest misconceptions on this board. There is an annual gift limit, yes, but there is also a lifetime gift limit. Anything above the annual amount is counted against the lifetime amount, which is currently $12.92mm per individual estate, provided you file the appropriate tax form.
As far as the gift tax question asked above, that’s probably one of the biggest misconceptions on this board. There is an annual gift limit, yes, but there is also a lifetime gift limit. Anything above the annual amount is counted against the lifetime amount, which is currently $12.92mm per individual estate, provided you file the appropriate tax form.
Posted on 1/24/23 at 11:28 am to EveryonesACoach
quote:
Was thinking I couldn't go wrong with just setting up separate accounts under my fidelity login for each kid and just dumping their share into VTI or VOO and come back in 15 years.
Put me down as agreeing! This is what I would do.
Gives you options should your kids get scholarships or turn into bank robbers (kidding).
Posted on 1/24/23 at 4:58 pm to EveryonesACoach
quote:
My thought was to give the kids options beyond education expenses, and perhaps have control of the money beyond them turning 18 like a UTMA would require. Was thinking I couldn't go wrong with just setting up separate accounts under my fidelity login for each kid and just dumping their share into VTI or VOO and come back in 15 years.
Have you asked the grandparents their thoughts? Could be a double edged sword as you may keyhole yourself into a bad idea. But just a thought?
Personally I think I'd consider putting something like $10k into their college fund and then opening individual accounts for $20k invested.
They can use it to buy their first car, downpayment on a house, wedding, etc. Sure its theirs but raise them right and they should make a good decision.
In my limited experience with friends and family, honestly I think its better for people to blow less money quickly then have someone manage it for them. Strictly because they will either learn or they won't. At least if they blow it you will know they suck with money. I've seen all too often someone baby their kids and then their kids never learn on their own.
Posted on 1/24/23 at 5:04 pm to EveryonesACoach
quote:
Thoughts on this plan? I've never been more stressed about what to do with money, the responsibility of properly handling such a generous gift from my kid's great grandparents weighs on me more than my own investment and retirement planning!
Keep in mind that if you do it under your name, you also bring potential estate consequences in play should you pass before you disperse the funds. Also potential issues in separate property vs community property. These issues are basically moot in a custodial/UTMA account. I would revisit that idea with a CPA/estate attorney to get some clarity.
This post was edited on 1/24/23 at 5:05 pm
Posted on 1/25/23 at 7:54 am to EveryonesACoach
While it doesn’t really have a tax impact, there is a bit of extra paperwork involved documenting the gift. They would have been better served gifting you $25k in Dec 22 and $25k in Jan 23.
Posted on 1/25/23 at 2:17 pm to EveryonesACoach
Give the money back to your Grandparents and ask them to make separate checks and then invest it whereever you want in the kids name---open a saving account in their name or a an investment account or really anything. Keep copies of all the transactions and ask your grandparents to write down their intended disbursement of the money.
Posted on 1/31/23 at 12:00 pm to EveryonesACoach
If you keep trying to spend your inheritance before your folks die you gonna end up eating out of the pig trough baw
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