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Started By
Message
re: Inheritance Advice
Posted on 1/24/23 at 8:54 pm to footballdude
Posted on 1/24/23 at 8:54 pm to footballdude
This all seems poorly thought out
2
Posted on 1/25/23 at 7:14 am to GeauxTigers123
Outside of the yearly gift tax, if the grandparents are just using their lifetime exclusion which 99% of people would, then does the whole one check even matter? The only potential issue I see is if he doesn’t split it up properly the kids could sue him. But that’s unlikely.
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 10:36 am to baldona
quote:
Outside of the yearly gift tax, if the grandparents are just using their lifetime exclusion which 99% of people would, then does the whole one check even matter?
Ultimately if the numbers are high enough, when the parents eventually gift the money to the their kids (the grandkids), it could result in an additional set of gift tax returns. Still no gift tax due, but someone has to fill that out, which means either doing it yourself or hiring someone to do it.
The sepearete checks thing is just so easy to do.
Posted on 1/25/23 at 10:48 am to GeauxTigers123
quote:
This all seems poorly thought out
The vast majority of "estate planning" that occurs without qualified professional help, is poorly thought out.
I can't tell you how many times I've seen an elderly last to die parent, on their deathbed, quitclaim the residence to the kids to "make it easier after I'm gone".
Meanwhile the property still needs to be retitled and all you did was throw away the basis step up.
Same with a lot of gifts.
Look, I fully support the concept of giving away your cash to the kids and grandkids now, while you are still healthy enough to see them enjoy it.
But I've seen so many "just before death" transfers that just cause so many unncessary problems and costs.
Here's another one I'm dealing with.
Dad about to die. Dad's IRA beneficiary is the estate. Blech. But he makes it worse. Apparently he decides to disown one of the kids, but doesn't have time/desire to change the will. Only two assets are house and IRA (and basically whatever amount of cash is in the checking account from distributiosn and social security before it is fully spent each mont).
So dad quitclaims rhe house to the two kids he still likes. He then change the beneficiary designiation to 100 percent to one of the kids, and tells the kid "just split it with your good sister". Dad then dies.
Well, now "splitting with the good sister" needs to be done with after tax dollars, which is stupid because the named sister is in a much higher tax bracket. We lose the step up on the house. And if they disclaim the IRA beneficiary, it goes back to the estate, which was never fixed, and bad sister gets 1/3.
Posted on 1/25/23 at 1:28 pm to baldona
quote:
Outside of the yearly gift tax, if the grandparents are just using their lifetime exclusion which 99% of people would, then does the whole one check even matter? The only potential issue I see is if he doesn’t split it up properly the kids could sue him. But that’s unlikely.
Lots of great information in the thread, thanks everyone. Let me clarify, I got two checks total, one from each grandparent, but with everyone's name on it as the payee for each.
To the point above about does it matter if it's one check, kids suing, etc. Doesn't the fact that the check was a no strings attached cash transfer just give me as the parent/guardian full rights to the money, and the children have no recourse if I just spend it all? It's not in a trust, it wasn't willed to them with stipulations, it was just a check. I cash $100 birthday checks for my kids all the time and then just transfer the money to their 529s.
I understand that there are some gift tax implications for myself whenever I do pass the money/stocks/whatever over to them in the future, but if legally speaking the money is no different than if my grandparents only put my name on the check, I would think I have all investing options open to me, right?
Posted on 1/25/23 at 1:43 pm to EveryonesACoach
quote:
understand that there are some gift tax implications for myself whenever I do pass the money/stocks/whatever over to them in the future, but if legally speaking the money is no different than if my grandparents only put my name on the check, I would think I have all investing options open to me, right?
But the check wasn’t made payable just to you, and it wasn’t their intent to give it just to you. That’s the biggest concern I’d have. You’re not talking about $100 birthday checks.
These shitty scenarios are probably pretty unlikely, but the fix (UTMA) is so simple that I think it’s worthwhile to explore.
Posted on 1/25/23 at 2:08 pm to Bacchus
If there was a taxable gift it is the gift's responsibility to pay the gift tax.
Posted on 1/25/23 at 2:16 pm to slackster
I'm still confused.... Can someone please restate the point about the #16k annual gift limit not really being at play due to a larger lifetime limit ?
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 1/25/23 at 2:50 pm to Zilla
quote:
I'm still confused.... Can someone please restate the point about the #16k annual gift limit not really being at play due to a larger lifetime limit ?
There are two related issues at play.
1) Everyone is allowed to gift so much, per person, per year, with no reporting obligation. If it is cash, for 2023, that amount is $17K per year. Last year it was $16k. This is referred to as the annual gift exclusion.
If you give gifts that are not easily valued, it gets a little more complicated.
2) If you exceed that annual exclusion, than any "overage" gets applied to your lifetime estate and gift tax combined exemption. This amount also changes from year to year and is currently 12.92 million.
Any time you use any of this exemption, you need to file a gift tax return. Any remaining exemption when you die, is applied against your estate.
So the only time you would ever actually owe gift tax, is if you blow past both the annual per receipient exclusion, AND you have used up all of your lifetime exemption.
Posted on 1/25/23 at 2:52 pm to EveryonesACoach
quote:
Doesn't the fact that the check was a no strings attached cash transfer just give me as the parent/guardian full rights to the money, and the children have no recourse if I just spend it all? It's not in a trust, it wasn't willed to them with stipulations, it was just a check. I cash $100 birthday checks for my kids all the time and then just transfer the money to their 529s.
If the kids names were listed on the check, it seems like it could be argued that the intent was for the kids to get some share of the money. It's confusing and sloppy, but the vast majority of issues here result from confusing and sloppy.
Is there a high chance your kids could sue you at some later age if they never get any of this? Not a high chance, but there is a chance, and trust me, no one wins there.
This post was edited on 1/25/23 at 3:29 pm
Posted on 1/31/23 at 9:44 am to LSUFanHouston
So relative (or anyone)can give me 200k in one check and all I would need to do is report it as a gift and no taxes owed by anyone? (Only have to report because over annual max gift but below lifetime max gift so no tax owed)
Posted on 1/31/23 at 11:03 am to Hankg
quote:
So relative (or anyone)can give me 200k in one check and all I would need to do is report it as a gift and no taxes owed by anyone? (Only have to report because over annual max gift but below lifetime max gift so no tax owed)
The person that does the gifting would be responsible for reporting it and paying any taxes if applicable.
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
Posted on 2/1/23 at 10:03 pm to LSUFanHouston
This was never my understanding, I thought you owed taxes that year...ok thanks
Posted on 3/24/23 at 9:50 am to LSUFanHouston
LSUFan can I ask what your job is? Not estate planning by chance??
Posted on 3/24/23 at 1:06 pm to tiger91
quote:Naw, he's a handyman at a Holiday Inn Express.
LSUFan can I ask what your job is? Not estate planning by chance??
Posted on 3/24/23 at 2:27 pm to soccerfüt
Hated to assume ... he could be in numerous areas related to money. Just wanting to know if he can recommend anyone in the Lafayette, LA area by any chance.
This post was edited on 3/24/23 at 2:29 pm
Posted on 3/25/23 at 1:32 pm to Bacchus
quote:
$17k in 2023
Grandma can give $17k grandpaw can give $17k to him and wive
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