right of survivorship.

[happyscooter]

Hard week. A lot has happened.

DH has right of survivorship for FIL account. But the $$ is supposed to go to the grands. Are there taxes due?

[happyscooter]

without giving out too much personal info, it's done. FIL listed DH as right of survivorship on a certain acct. FIL told DH that the money was for the grands. BIL and DH both have children. I asked DH why his FIL didn't have separate accts with the grands listed as beneficiaries. DH didn't know and it's too late to ask. It is more than $13k. I just don't want the bank to make out checks to the grands and then we get a tax bill from the IRS.

[mwcpa]

under the tax law (gift tax) any person can gift to any other person up to 13,000 cumulative per year without any gift tax obligation.

by example.... looking at your situation...(reference is the titles you gave)

if FIL gifted under 13,000 to each grand from the right of survivorship account with DH (and there were no other gifts) then FIL has no gift tax issue, nor does DH.

if FIL passed away and funds transferred to DH by operation of law and DH honored FIL oral wishes, as long as DH gave less than 13,000 to each grand (and no other gifts) he would not have any gift tax issue (I remain silent on any possible estate tax issues that may exist on FIL, assuming he passed away, that is a separate matter).

if each grand was gifted more than 13,000 (cumulative) from any one person during the year then there may be some issues to address, but I do not believe, based on your facts that this is the case

[happyscooter]

it is more than 13k a piece. $$ probably will pay for a house down payment or school loans. so $$ will be spent soon and they will not be able to pay the taxes if DH calls them and asks for it. i 'tried' to suggest waiting until next year to see the tax implications and THEN split it up. BIL wants to settle this ASAP. But he won't be the one with the IRS breathing down his neck.

[Deleted]

Scooter has FIL died or are we talking hypothetical? Because if we're talking about hypothectical, DFIL or whomever holds his POA could open additional accounts with each of the beneficiaries in the name of each grandchild. If you do this at the same bank as the current account you can often do it over the phone. There is a bit of PITA factor though. In broad numbers, how much is the estate worth and about how much is each grand child supposed to get; e.g. estate is worth $1M+ 6 gc is supposed to get 50k each.

Also keep in mind that it is normally the Giver, not the receipent, who pays gift tax. So theorectically DH could subtract an estimated tax payment before he gives them anything. But again you really need to talk to your CPA because there are some other strategies especially if DH's lifetime estate is not likely to exceed over a million dollars.

Alternatively, if we're only talking about $15k per grandchild, you could check with your CPA about DH taking the money, gifting 13k per child and gifting you 12k and you turning around and gifting that 2k to each child. How many of these gc are your children?

ETA: BTW, the bank is going to make the check out to DH (the beneficiaries) not the grandkids. They aren't going to get in the middle of interpreting wills or Trusts.

[happyscooter]

passed. and i am getting physically ill from DH telling me $$ things.

[happyscooter]

that's what i told dh to do. file taxes next year, pay the taxes then split the remainder. i know the recipent wouldn't pay the taxes that's why i said, if he divided up the money and it went for down house, car, loans, whatever, those grands wouldn't have it to give back to us for us to pay. screwed again.

[Deleted]

Deep breaths!

I know this is hard because of all the crap you went through with your parent's estate. The lesson to take away from that is for DH to take his time so he disburses in a thoughtful way and doesn't make a potentially difficult situation worse. How long ago did FIL pass? DH shouldn't let other peoples financial problems bully him into making bad decisions for himself.

[Deleted]

Actually he can gift $13k this year and gift another $13k next year. The gc can't wait 3 freaking weeks for a second distribution?

ETA: my idiot brother was in foreclosure when I made an inital distribution to him for 10k. My mother had given him 10k shortly before she died. I told him he wasn't going to get anything more until I was done with the administration of the estate and I got my 20k.

[Peace77]

I understand that FIL intended the money to go to the grandkids, but it doesn't have to go all at once.
It could be split up: some now, some when they turn 18, some at 21.
Giving out some now and some later would solve the problem of possible tax bill later.

If each child gets 1/3 of their possible share now, that should hold them until the estate is settled.
At that time after all bills and taxes have been paid, they can receive the remainder.

If 1/3 of a share is over 13k, then give each one $12k now and another portion next year.

If you give out some of the money instead of all of it, then you don't have to worry about asking for some of it back.

[Deleted]

Just wanted to post this link for IRS FAQs about Gift and Estate Taxes before I sign off tonight:

www.irs.gov/businesses/small/article/0,,id=108139,00.html

[Mardi Gras Audrey]

Dec 7, 2011 11:13:10 GMT -5 Peace77 said:

I understand that FIL intended the money to go to the grandkids, but it doesn't have to go all at once.
It could be split up: some now, some when they turn 18, some at 21.
Giving out some now and some later would solve the problem of possible tax bill later.

If each child gets 1/3 of their possible share now, that should hold them until the estate is settled.
At that time after all bills and taxes have been paid, they can receive the remainder.

If 1/3 of a share is over 13k, then give each one $12k now and another portion next year.

If you give out some of the money instead of all of it, then you don't have to worry about asking for some of it back.

This!! Your DH shouldn't feel rushed to finish this. He needs to make sure that it is done properly. His job is to make sure that his father's wishes are upheld but also to make sure that it is done within the law and without cost to him. If the heirs are complaining about the "wait", he should tell them to back off. If they are really pushing the issue, it reflects very poorly on them (IMHO, it maks them look like vultures waiting to cash in on a death). Tell him to take a deep breath and relax. This is a hard time and my thoughts go out to him and you..

When my great aunt died, it took over a year and half to get the estate settled and that was with an already established trust, a will, no disputes, and an executor who is very organized and well educated on financial matters.

[hubison]

would someone please fill me in on the acronyms "DH", "BIL" etc. so I could follow along better and make sense. Thanks.

[Gardening Grandma]

Dec 7, 2011 14:55:32 GMT -5 hubison said:

would someone please fill me in on the acronyms "DH", "BIL" etc. so I could follow along better and make sense. Thanks.

DH - Dear Husband
BIL - Brother in Law
SIL - Sister in Law
DW - Dear Wife
DS - Dear Son
DD - Dear Daughter
DGD - Dear Granddaughter
DGS - Dear Grandson

(you get the idea)

[Wisconsin Beth]

DSS = dear stepson
DSD = dear stepdaughter

And for some posters, the D does NOT equal dear (dumb, d@mn, etc.)

[mwcpa]

there is a good link from bonn....

in regards to the money, legally, it is the co-owners (DH) upon the passing of the other owner (FIL).... he (DH) is not legally obligated to give any money to the other individuals (grands).....

the 13K limit is now the new owners (DH) issue....

no tax is due upon the recipt of the account by the new sole owner (DH in this case).....

DH should meet with a qualified professional tax advisor and possibly an attorney to review the legal and tax issues with the estate BEFORE he passes out money to the "orally named" beneficiaries (grands).

[TheOtherMe]

DH should meet with a qualified professional tax advisor and possibly an attorney to review the legal and tax issues with the estate BEFORE he passes out money to the "orally named" beneficiaries (grands).

Great advice from mwcpa as usual. Your husband is not legally obligated to do anything and doesn't need to rush, despite what your BIL wants done. The money is legally your husband's, not the BIL's.

k to mwcpa.

[happyscooter]

I'm back.

Without giving out too much info, there were more accounts than we knew. No one is pushing and BIL didn't know FIL had asked DH about his will. (Do you want to be in my will?) But apparently FIL had a change of heart and DID list DH in it.

DH and BIL are actually thrilled that mom and dad thought enough of the grands to leave them $$$. Grands have NO idea. But I can definitely say, they will be extremely appreciative and the $$ will be spent on worthwhile things.

[happyscooter]

Christmas Bonn-Bonn, I have to say, your advice helped alot. I felt overwhelmed.

Deep Breaths. Deep Breaths.

[Deleted]

Scooter,

It frequently takes a minimum of of six months, often a year or more to settle an organized estate. What happened in my girlfriend's case (Uncle passed around Christmas 2010 and the estate was worth about $1M) was the Trustee did an initial disbursement of $5k the beginning of 2011. The Trustees are investigating whether one more bill (35k hospital bill) really needs to be paid from the estate or if insurance will take care of it. Then the rest of the estate will be distributed to the 4 beneficiaries. I'm sure the Trustee would like to do it this year so they can file the final Trust return for 2011 but it might slip over into 2012.

There's no reason that you husband couldn't do something similar; e.g. give each grand $5k (Merry Christmas!) and then does another distribution after he has consulted with his CPA (and deducted the consultation fee) and has figured out the best way to distribute the rest of the proceeds.