bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 15, 2020 14:27:32 GMT -5
This is my back story: My father passed away 5 years ago. He was in the habit of gifting yearly to his four children. After his passing, my mother was in agreement to also gift to the spouses of the four children in an effort to speed up the wealth transfer of her estate. The aim being, to avoid the federal estate tax. This gifting has happened several years in a row. Most of Mom’s assets are real estate rather than cash.
I recently received news that one of my brothers is upset because his wife has deposited checks written to her in an account that he is listed as beneficiary but not an owner. I don’t know the details after that, I know I can’t win getting in the middle of their marriage and their money.
Before the tax law changed recently, my parents’ estate was up against the federal limit for estate tax. Now the limit has been raised and everything is great, except that tax law could change again. I predict our country will need more tax revenue, not less.
I am looking for good ideas to address inheritance dramas such as we have now. My best idea for the current drama is this: Go back to gifting to the four children only. Mom buys four CD’s with the yearly extra income, payable on death to the child.
I would love to hear how other families deal with this transition. We could use some good ideas.
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on May 15, 2020 14:47:17 GMT -5
Sadly, neither my Mother or My in-laws have that kind of $$, so I have no advice.
Our marital property would be 50/50 - I guess your brother could just deposit his checks in an account his wife has no access to also. If their relatonship is fragile, he should seek the advice of an attorney. But having money invested in your name vs. your spouses can fall into play if one spouse needs to go on Medicaid - so who knows why she decided to invest it that way.
On the one hand, since they changed the Estate Tax Law, she could just wait until the estate is distributed, but, there is probably a pretty good chance they will change the Estate Tax Provisions in the next year or so.
Is your Mom already gifting to the Grandchildren? She could skip he kids and gift some $$ right to the Grandchildren.
The family that I work for has part of the estate in Trusts. I am not sure if they are Revocable or not. Upon the owner's death, Revocable trust $$ were transferred to two trusts - one for the Benefit of his wife, and one for the "Family". They had a big law firm consult on how to avoid paying Estate Tax too. It is my understanding that under the new laws, it would not be an issue, but under the Old Laws, it was going to be taxable. They had problems when the Mother of the former owner passed, and the Estate Tax had to be paid, and several of the children wanted out of the business. They had to take a large loan against the business, and it was very difficult for them to stay financially solvent from probably 15 years - they hope to avoid having that happen when the Mom passes and the business again passes to multiple heirs.
|
|
Deleted
Joined: Mar 28, 2024 4:42:46 GMT -5
Posts: 0
|
Post by Deleted on May 15, 2020 14:58:14 GMT -5
Sadly, neither my Mother or My in-laws have that kind of $$, so I have no advice. Our marital property would be 50/50 - I guess your brother could just deposit his checks in an account his wife has no access to also. If their relationship is fragile, he should seek the advice of an attorney. But having money invested in your name vs. your spouses can fall into play if one spouse needs to go on Medicaid - so who knows why she decided to invest it that way. I don't think Medicaid cares whose name is on the account when it comes to one of a married couple qualifying- it would be too easy to transfer all the assets to the healthy spouse when the other needs LTC. So, I doubt that's her motivation. She may just want money that she considers "hers"- but, as th OP noted, that's pretty much something the two of them need to resolve. If she's thinking of divorce, I don't think that putting it in account in her name will mean anything when it comes to dividing assets.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 15, 2020 15:04:25 GMT -5
Gifting to grandchildren is problematic because two of my brothers have no children. Both have married women later in life and have step children. More layers of complication.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 15, 2020 15:07:48 GMT -5
Sadly, neither my Mother or My in-laws have that kind of $$, so I have no advice. Our marital property would be 50/50 - I guess your brother could just deposit his checks in an account his wife has no access to also. If their relationship is fragile, he should seek the advice of an attorney. But having money invested in your name vs. your spouses can fall into play if one spouse needs to go on Medicaid - so who knows why she decided to invest it that way. I don't think Medicaid cares whose name is on the account when it comes to one of a married couple qualifying- it would be too easy to transfer all the assets to the healthy spouse when the other needs LTC. So, I doubt that's her motivation. She may just want money that she considers "hers"- but, as th OP noted, that's pretty much something the two of them need to resolve. If she's thinking of divorce, I don't think that putting it in account in her name will mean anything when it comes to dividing assets. I would think this account would be her ready cash to start over should this marriage end. I sincerely hope that is not the case. My sister in law has never been around this much money in her life, hopefully the two of them can agree on a better use for the money than causing conflict.
|
|
Deleted
Joined: Mar 28, 2024 4:42:46 GMT -5
Posts: 0
|
Post by Deleted on May 15, 2020 15:13:44 GMT -5
If the money is given to the spouses as tax evasion because it's really intended for the son/daughter that's an issue. Otherwise, the money gifted should be used in accordance to how the giftee chooses. If that's not the wishes of the parent, then their checks should reflect that in the "to" line.
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on May 15, 2020 15:13:55 GMT -5
Sadly, neither my Mother or My in-laws have that kind of $$, so I have no advice. Our marital property would be 50/50 - I guess your brother could just deposit his checks in an account his wife has no access to also. If their relationship is fragile, he should seek the advice of an attorney. But having money invested in your name vs. your spouses can fall into play if one spouse needs to go on Medicaid - so who knows why she decided to invest it that way. I don't think Medicaid cares whose name is on the account when it comes to one of a married couple qualifying- it would be too easy to transfer all the assets to the healthy spouse when the other needs LTC. So, I doubt that's her motivation. She may just want money that she considers "hers"- but, as th OP noted, that's pretty much something the two of them need to resolve. If she's thinking of divorce, I don't think that putting it in account in her name will mean anything when it comes to dividing assets. There were issues with the way some of my Parent's assets were held - like the life insurance they bought to offset the way the Pension was drawn down etc. There was something about Dad owned the policy, so if he went into a nursing home, Medicaid would require them to convert it to cash, but if it had been in my Mom's name that would not have been so. My Mom had consulted with Elder Care Attorneys when my Dad became bedridden/lost mobility and then again six months or so before he passed. She worked very hard to keep him out of a nursing home b/c if he had gone into a nursing home much of the assets they owned would have gone to the State to help pay for his care, and she would have been a very poor old lady. Luckily my Dad never had to go to a nursing home - but he did spend about a week in Hospice Care. As far as I know, you can shelter an inheritance in WI from Marital Property, but I don't think Money gifted from a parent to Children/in-laws would escape marital property. Whether or not it is in my name or DH's name it is still marital property. Investing it in my name can keep him from spending it on Hookers and Blow though.
|
|
oped
Senior Member
Joined: Aug 20, 2018 20:49:12 GMT -5
Posts: 4,676
|
Post by oped on May 15, 2020 16:20:59 GMT -5
There is a lifetime max in addition to the annual gift, you could look at that.
But if the gift is written to the spouse, it is her gift... she doesn’t have to even list brother as beneficiary...
Gifts are generally not marital property. It would have to be specified in state rules. It doesn’t change based on who the gift is from... the gift by nature must be unencumbered or it is not a gift.
|
|
countrygirl2
Senior Associate
Joined: Dec 7, 2016 15:45:05 GMT -5
Posts: 16,709
|
Post by countrygirl2 on May 15, 2020 16:41:07 GMT -5
So they were worth more then $22 million dollars, that was the limit for couples. She is going to have a heck of a time gifting it at $15000 each per year. Sounds like there will be gift tax on an estate like that eventually.
The Tax Cuts and Jobs Act raised the gift and estate tax exemption — also known as the unified credit — to $11.18 million per person in 2018, more than doubling the limit under the old tax law.
If she has that kind of money she needs to be looking at trusts and some other methods of gifting through attorneys. Also just pay for long term care. Wish we had that kind of problem.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 15, 2020 16:55:28 GMT -5
If the money is given to the spouses as tax evasion because it's really intended for the son/daughter that's an issue. Otherwise, the money gifted should be used in accordance to how the giftee chooses. If that's not the wishes of the parent, then their checks should reflect that in the "to" line. Exactly. There is no putting the genie back in the bottle, the money belongs to my sister in law. It was intended that this money would be helpful as they both move forward into their retirement years and that may well be her plan. However, this is very upsetting to my brother. Since this is a point of conflict, I suggest the gifting go back to just the siblings. Unfortunate, because anything over the federal estate tax limit will be taxed at 40%. I feel like the squeaky wheel has applied the brakes. My brother and his wife not being on the same page about money is a problem. Managing our parents estate is an ongoing responsibility/problem. First world problems, I know, but I am trying to learn the best way forward.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 15, 2020 17:03:45 GMT -5
So they were worth more then $22 million dollars, that was the limit for couples. She is going to have a heck of a time gifting it at $15000 each per year. Sounds like there will be gift tax on an estate like that eventually. The Tax Cuts and Jobs Act raised the gift and estate tax exemption — also known as the unified credit — to $11.18 million per person in 2018, more than doubling the limit under the old tax law. If she has that kind of money she needs to be looking at trusts and some other methods of gifting through attorneys. Also just pay for long term care. Wish we had that kind of problem. Half that amount. Like I said, this is not a problem until 2026 until the limit resets. Mom, however, may like to stick around past then. We are working in the parameters of two trusts. The gifting is simply a way to transfer it now rather than later. Mom has had long term care insurance since the 1990's. We are blessed with an affordable policy. A larger issue is my brother eventually inheriting $2 mil in assets and not being prepared for this to drop into his life. No drama like a family drama.
|
|
Deleted
Joined: Mar 28, 2024 4:42:46 GMT -5
Posts: 0
|
Post by Deleted on May 15, 2020 17:19:03 GMT -5
My brother and his wife not being on the same page about money is a problem. Managing our parents estate is an ongoing responsibility/problem. First world problems, I know, but I am trying to learn the best way forward. Get thee to a lawyer. You can't control what your brother and his wife do with money but your mother can control who holds the purse strings (and it can be a neutral party such as a bank) and doles it out after her death, and at what intervals. I'm nowhere near that level of assets, have only one child who's very sensible with money (so is DDIL) except that IMO he gives too much away. I've got a Revocable Trust. All the legal work, including a Will, Medical POA, etc. cost me about $1,200. With that much at stake your mother should do some planning.
|
|
Miss Tequila
Distinguished Associate
Joined: Dec 19, 2010 10:13:45 GMT -5
Posts: 20,602
|
Post by Miss Tequila on May 15, 2020 17:32:37 GMT -5
Sadly, neither my Mother or My in-laws have that kind of $$, so I have no advice. Our marital property would be 50/50 - I guess your brother could just deposit his checks in an account his wife has no access to also. If their relationship is fragile, he should seek the advice of an attorney. But having money invested in your name vs. your spouses can fall into play if one spouse needs to go on Medicaid - so who knows why she decided to invest it that way. I don't think Medicaid cares whose name is on the account when it comes to one of a married couple qualifying- it would be too easy to transfer all the assets to the healthy spouse when the other needs LTC. So, I doubt that's her motivation. She may just want money that she considers "hers"- but, as th OP noted, that's pretty much something the two of them need to resolve. If she's thinking of divorce, I don't think that putting it in account in her name will mean anything when it comes to dividing assets. It will if they have a prenup. I’m getting married and will have a prenup. We have will joint assets but we will also have separate assets that will pass to our heirs. I don’t want my children’s inheritance to go to his heirs if I were to die first. Once we have time, I’m going to have to consider how we handle the assets. I don’t want either one of us drained if the other one has to go To a nursing home. It’s different if I were single because then the assets would be mine and they would be used to support me. The hard part is when you are married and your assets get taken. That’s the part that scares me about getting married
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 15, 2020 18:02:58 GMT -5
My brother and his wife not being on the same page about money is a problem. Managing our parents estate is an ongoing responsibility/problem. First world problems, I know, but I am trying to learn the best way forward. Get thee to a lawyer. You can't control what your brother and his wife do with money but your mother can control who holds the purse strings (and it can be a neutral party such as a bank) and doles it out after her death, and at what intervals. I'm nowhere near that level of assets, have only one child who's very sensible with money (so is DDIL) except that IMO he gives too much away. I've got a Revocable Trust. All the legal work, including a Will, Medical POA, etc. cost me about $1,200. With that much at stake your mother should do some planning. We have been to the lawyer, the accountant and the investment professional. This sister in law has been in each one's ear telling them what she thinks should happen since Dad passed. Their fees reflect this time spent. There are two trusts, one for Mom, one for Dad. Brother #1 who lives near Mom is the executor of both. I am next in line as executor. My brother #2 causing drama is the one that needs to get to a lawyer and retirement planner. He is very frugal and has probably had separate finances throughout the marriage. If he intends to keep things separate, it would be helpful to know as to honor his wishes. He also needs to plan ahead for the generational change of assets if he intends to keep his money separate from his wife's. My plan is to create a trust for our children when I inherit these assets. When you don't have kids, your priorities are different. If you don't trust your wife with money, your priorities are different.
|
|
Deleted
Joined: Mar 28, 2024 4:42:46 GMT -5
Posts: 0
|
Post by Deleted on May 15, 2020 18:06:38 GMT -5
There's some sort of law, at least there is in CA, where inheritances aren't community property and can't be taken in divorce.
My mom inherited a pile of cash from my grandparents and my step-father wasn't entitled to any of it even if she died. It was in an account with me as the beneficiary.
Had she deposited it into their joint checking account that would have changed things. But, as long as the money wasn't co-mingled, it was solely my mother's property.
|
|
haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,869
|
Post by haapai on May 15, 2020 18:12:17 GMT -5
I think that you should tune out your brother's whinging and put on a green eyeshade. If your mom halves her gifting, he won't get much more after she dies because it will need to be split four ways and taxed. He's being a bit of a jerk.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 15, 2020 18:12:37 GMT -5
There's some sort of law, at least there is in CA, where inheritances aren't community property and can't be taken in divorce. My mom inherited a pile of cash from my grandparents and my step-father wasn't entitled to any of it even if she died. It was in an account with me as the beneficiary. Had she deposited it into their joint checking account that would have changed things. But, as long as the money wasn't co-mingled, it was solely my mother's property. And this is why some family trusts go on for years and years. To prevent a beneficiary from burning through it or co-mingling it and losing half.
|
|
tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
Posts: 6,831
|
Post by tskeeter on May 15, 2020 23:25:09 GMT -5
If the money is given to the spouses as tax evasion because it's really intended for the son/daughter that's an issue. Otherwise, the money gifted should be used in accordance to how the giftee chooses. If that's not the wishes of the parent, then their checks should reflect that in the "to" line. Clarification: tax evasion is a crime, tax avoidance is smart financial management. What the OP describes is clearly tax avoidance. Gifting of a person’s accumulated assets, regardless of whether the person receiving the gift is a biological child of the person making the gift or not, is entirely legal. The fashion by which the person receiving the gift decides to hold title to the gift is not relevant to determining if the gift was truly a gift, as defined by the IRS. Furthermore, the fact that Mom continued to make additional gifts even after earlier gifts were not placed in a joint account confirms that the intent of the gifts conforms to IRS requirements.
|
|
tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
Posts: 6,831
|
Post by tskeeter on May 16, 2020 0:13:46 GMT -5
This is my back story: My father passed away 5 years ago. He was in the habit of gifting yearly to his four children. After his passing, my mother was in agreement to also gift to the spouses of the four children in an effort to speed up the wealth transfer of her estate. The aim being, to avoid the federal estate tax. This gifting has happened several years in a row. Most of Mom’s assets are real estate rather than cash. I recently received news that one of my brothers is upset because his wife has deposited checks written to her in an account that he is listed as beneficiary but not an owner. I don’t know the details after that, I know I can’t win getting in the middle of their marriage and their money. Before the tax law changed recently, my parents’ estate was up against the federal limit for estate tax. Now the limit has been raised and everything is great, except that tax law could change again. I predict our country will need more tax revenue, not less. I am looking for good ideas to address inheritance dramas such as we have now. My best idea for the current drama is this: Go back to gifting to the four children only. Mom buys four CD’s with the yearly extra income, payable on death to the child. I would love to hear how other families deal with this transition. We could use some good ideas. There are a number of reasons why a spouse may want to keep gifted or inherited assets separated from marital property. To protect money from a spendthrift spouse. My BIL, the 65 year old Doc, has managed to spend virtually every dollar he ever earned. The only retirement savings he and my sister have is Social Security because every time they were a few bucks ahead, BIL came up with something that they just had to spend a bunch of money on. To protect money from a spouse’s creditors. This can be especially important if a spouse has their own business, which can add another set of creditors to your potential claimant list. To protect money in the event a spouse gets sued. I have kept the inheritance from my folks separated from our marital assets. Think of what could happen if your spouse was at fault in a car accident that cause one or more young people to be permanently disabled and needing care services for the rest of their life. It could be like the son of a co-worker, who was permanently disabled in an accident and consumed $500,000 worth of medical care in about six months. A few hundred thousand of auto liability insurance, or even a couple million of umbrella liability insurance, may not go very far. At that point, your personal assets are on the line. Facing an aggressive personal injury attorney, even your normally protected 401K account may not be safe.
|
|
tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
Posts: 6,831
|
Post by tskeeter on May 16, 2020 0:55:14 GMT -5
Bookkeeper, did you realize that what we often think of the federal estate tax exemption also applies to gifts? It’s a combined gift/estate tax exemption. If the total exemption allowed is $5,000,000 and you give a $400K gift, the gift would be exempt and the remaining amount available to use as an estate tax exemption would be $4,600,000.
Since you’re concerned about the possibility that future Congresses might reduce the exemption, you might think about using part of the exemption to exempt gifts now. I don’t think Congress would require you to go back to prior years and pay taxes on gifts that were legally exempted when the gift was made.
As always, before implementing a gifting plan, discuss your plans with an estate tax professional. There may be more to the process than I realize.
|
|
oped
Senior Member
Joined: Aug 20, 2018 20:49:12 GMT -5
Posts: 4,676
|
Post by oped on May 16, 2020 6:55:41 GMT -5
If the money is given to the spouses as tax evasion because it's really intended for the son/daughter that's an issue. Otherwise, the money gifted should be used in accordance to how the giftee chooses. If that's not the wishes of the parent, then their checks should reflect that in the "to" line. Clarification: tax evasion is a crime, tax avoidance is smart financial management. What the OP describes is clearly tax avoidance. Gifting of a person’s accumulated assets, regardless of whether the person receiving the gift is a biological child of the person making the gift or not, is entirely legal. The fashion by which the person receiving the gift decides to hold title to the gift is not relevant to determining if the gift was truly a gift, as defined by the IRS. Furthermore, the fact that Mom continued to make additional gifts even after earlier gifts were not placed in a joint account confirms that the intent of the gifts conforms to IRS requirements. Except son assumed 30k was for him... not 15k for each. Hmm. My dad wrote the last check he gave us to the both of us. It was deposited as one in our joint account but contained more than the single exemption (but not double the max) ... not sure if that was appropriate? Although we would have put 2 checks in joint, but I guess it’s a possible alternative to consider. Although I still say she should have a say with her gift if she prefer it go elsewhere. That’s just my opinion. That said, while gifts are equal in this house as they should be, I won’t co-mingle any inheritance should it come one day, but that’s more for the reasons Tequila notes... you never know what could happen.
|
|
Deleted
Joined: Mar 28, 2024 4:42:46 GMT -5
Posts: 0
|
Post by Deleted on May 16, 2020 8:00:08 GMT -5
It will if they have a prenup. I’m getting married and will have a prenup. We have will joint assets but we will also have separate assets that will pass to our heirs. I don’t want my children’s inheritance to go to his heirs if I were to die first. Once we have time, I’m going to have to consider how we handle the assets. I don’t want either one of us drained if the other one has to go to a nursing home. It’s different if I were single because then the assets would be mine and they would be used to support me. The hard part is when you are married and your assets get taken. That’s the part that scares me about getting married. Are you sure a prenup will protect you? This was a big concern when DH and I married; I was 50 and he was 65 with very few assets. We'd looked into it and figured there was not much we could do and a prenup wouldn't help. I did a search and here's one example. coulsonelderlaw.com/medicaid-prenuptial-agreement/There's some exception called "spousal refusal" in NY where the healthy spouse can refuse to use their assets to pay for lTC for the other, but the state can go after them and apparently a prenup MIGHT be a defense. Personally I have no intention of marrying a guy who can't fund his own LTC. We have been to the lawyer, the accountant and the investment professional. My plan is to create a trust for our children when I inherit these assets. When you don't have kids, your priorities are different. If you don't trust your wife with money, your priorities are different. OK, thanks- I should have know that with that much at stake you'd get professional advice! The two attorneys I've worked with on my own estate planning have seen and heard it all- I could tell from some of the questions they asked and a few of the stories they told.
|
|
jerseygirl
Senior Member
Joined: May 13, 2018 7:43:08 GMT -5
Posts: 4,698
|
Post by jerseygirl on May 16, 2020 8:07:22 GMT -5
You can gift more than $15000 each person in a year tax free. Get form 709 (google) and fill in for gifts over $15000 person. No gift tax is due but the amount is deducted from the amount in estate that isn’t taxed. Also both husband and wife can gift the $15000 to a person Son - $15000 from wife $15000 from husband. DIL same $15000 from each and so on But if wife gifts eg $100,000 to son, then fill in form 709 submit same time as IRS taxes. No gift tax due but deducted from the $5 million estate not taxed Good way to give to your family when you can enjoy seeing benefits to your kids. Maybe college tuition, down payment on house etc I’d rather give now when they need money for kids or buying house than when I die. Also try to keep gifts equal maybe not every year but overall
|
|
Miss Tequila
Distinguished Associate
Joined: Dec 19, 2010 10:13:45 GMT -5
Posts: 20,602
|
Post by Miss Tequila on May 16, 2020 8:11:16 GMT -5
It will if they have a prenup. I’m getting married and will have a prenup. We have will joint assets but we will also have separate assets that will pass to our heirs. I don’t want my children’s inheritance to go to his heirs if I were to die first. Once we have time, I’m going to have to consider how we handle the assets. I don’t want either one of us drained if the other one has to go to a nursing home. It’s different if I were single because then the assets would be mine and they would be used to support me. The hard part is when you are married and your assets get taken. That’s the part that scares me about getting married. Are you sure a prenup will protect you? This was a big concern when DH and I married; I was 50 and he was 65 with very few assets. We'd looked into it and figured there was not much we could do and a prenup wouldn't help. I did a search and here's one example. coulsonelderlaw.com/medicaid-prenuptial-agreement/There's some exception called "spousal refusal" in NY where the healthy spouse can refuse to use their assets to pay for lTC for the other, but the state can go after them and apparently a prenup MIGHT be a defense. Personally I have no intention of marrying a guy who can't fund his own LTC. We have been to the lawyer, the accountant and the investment professional. My plan is to create a trust for our children when I inherit these assets. When you don't have kids, your priorities are different. If you don't trust your wife with money, your priorities are different. OK, thanks- I should have know that with that much at stake you'd get professional advice! The two attorneys I've worked with on my own estate planning have seen and heard it all- I could tell from some of the questions they asked and a few of the stories they told. No but that’s not what I meant in my post. My pre-nup is designed to protect my children’s inheritance in the event of divorce or if I die first. I’m thinking more along the lines of an irrevocable trust when the income can be used for anything but not the principal. I have truly done zero research into this as I’m not at a point where that is a worry. The income of the trust could be used to support my future husband in a nursing home if his assets are exhausted, but my heirs and I will never lose the underlying assets. Like I said, no idea on whether this would work or not. There will be substantial assets that will never be in joint names. But the income from everything will be used for both of us. To be fair, he also has assets at risk and I want to make sure what he brings to the marriage goes to his heirs and not my children or to take care of me. But I do know how expensive a nursing home can be if you have to spend several years in one.
|
|
azucena
Junior Associate
Joined: Jan 17, 2011 13:23:14 GMT -5
Posts: 5,111
|
Post by azucena on May 16, 2020 11:08:58 GMT -5
Bookkeeper - one thing I haven't seen discussed is that this might a good place to use life insurance as a tax shelter. She could buy a single premium policy and have the death benefit split amongst the siblings. I don't think the benefit is taxable but again check with professionals.
|
|
Rukh O'Rorke
Junior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 9,985
|
Post by Rukh O'Rorke on May 16, 2020 11:25:00 GMT -5
Get thee to a lawyer. You can't control what your brother and his wife do with money but your mother can control who holds the purse strings (and it can be a neutral party such as a bank) and doles it out after her death, and at what intervals. I'm nowhere near that level of assets, have only one child who's very sensible with money (so is DDIL) except that IMO he gives too much away. I've got a Revocable Trust. All the legal work, including a Will, Medical POA, etc. cost me about $1,200. With that much at stake your mother should do some planning. We have been to the lawyer, the accountant and the investment professional. This sister in law has been in each one's ear telling them what she thinks should happen since Dad passed. Their fees reflect this time spent.There are two trusts, one for Mom, one for Dad. Brother #1 who lives near Mom is the executor of both. I am next in line as executor. My brother #2 causing drama is the one that needs to get to a lawyer and retirement planner. He is very frugal and has probably had separate finances throughout the marriage. If he intends to keep things separate, it would be helpful to know as to honor his wishes. He also needs to plan ahead for the generational change of assets if he intends to keep his money separate from his wife's. My plan is to create a trust for our children when I inherit these assets. When you don't have kids, your priorities are different. If you don't trust your wife with money, your priorities are different. So - who's paying for her time with them? why is she involved in that at all? Seems like the whole process invited drama somewhere along the line. Should have involved only Mom and her executor. Maybe all siblings if everything was simpatico. But, spouses? With so many siblings already running around? And 15k in SIL's own account is nothing really compared to the estate. Why does your brother care so much? It was a gift to her and she wanted her own private nest egg. Is he usually so controlling? That may be why she took this opportunity to have something in her own name. Since you've had multiple layers of professional help on the estate, tell him and her to take their issues to marriage counselling - and to leave their personal squabbles out of the estate issues.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 16, 2020 11:59:38 GMT -5
We have been to the lawyer, the accountant and the investment professional. This sister in law has been in each one's ear telling them what she thinks should happen since Dad passed. Their fees reflect this time spent.There are two trusts, one for Mom, one for Dad. Brother #1 who lives near Mom is the executor of both. I am next in line as executor. My brother #2 causing drama is the one that needs to get to a lawyer and retirement planner. He is very frugal and has probably had separate finances throughout the marriage. If he intends to keep things separate, it would be helpful to know as to honor his wishes. He also needs to plan ahead for the generational change of assets if he intends to keep his money separate from his wife's. My plan is to create a trust for our children when I inherit these assets. When you don't have kids, your priorities are different. If you don't trust your wife with money, your priorities are different. So - who's paying for her time with them? why is she involved in that at all? Seems like the whole process invited drama somewhere along the line. Should have involved only Mom and her executor. Maybe all siblings if everything was simpatico. But, spouses? With so many siblings already running around? And 15k in SIL's own account is nothing really compared to the estate. Why does your brother care so much? It was a gift to her and she wanted her own private nest egg. Is he usually so controlling? That may be why she took this opportunity to have something in her own name. Since you've had multiple layers of professional help on the estate, tell him and her to take their issues to marriage counselling - and to leave their personal squabbles out of the estate issues. My sister in law likes to call up the attorney, CPA and investment professional when things are not to her satisfaction. These individuals bill their time accordingly, as would I. These bills get paid by our father's trust and our mother who is still with us. My brother and his wife absolutely need to see a marriage counselor and a retirement counselor because there are big changes coming their way.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 16, 2020 12:05:54 GMT -5
If the money is given to the spouses as tax evasion because it's really intended for the son/daughter that's an issue. Otherwise, the money gifted should be used in accordance to how the giftee chooses. If that's not the wishes of the parent, then their checks should reflect that in the "to" line. Clarification: tax evasion is a crime, tax avoidance is smart financial management.
What the OP describes is clearly tax avoidance. Gifting of a person’s accumulated assets, regardless of whether the person receiving the gift is a biological child of the person making the gift or not, is entirely legal. The fashion by which the person receiving the gift decides to hold title to the gift is not relevant to determining if the gift was truly a gift, as defined by the IRS. Furthermore, the fact that Mom continued to make additional gifts even after earlier gifts were not placed in a joint account confirms that the intent of the gifts conforms to IRS requirements. Thank you for pointing this out. We have worked very carefully to stay within the parameters of the law. All parties involved do not want to add another level of complication with the IRS.
|
|
Rukh O'Rorke
Junior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 9,985
|
Post by Rukh O'Rorke on May 16, 2020 12:38:51 GMT -5
So - who's paying for her time with them? why is she involved in that at all? Seems like the whole process invited drama somewhere along the line. Should have involved only Mom and her executor. Maybe all siblings if everything was simpatico. But, spouses? With so many siblings already running around? And 15k in SIL's own account is nothing really compared to the estate. Why does your brother care so much? It was a gift to her and she wanted her own private nest egg. Is he usually so controlling? That may be why she took this opportunity to have something in her own name. Since you've had multiple layers of professional help on the estate, tell him and her to take their issues to marriage counselling - and to leave their personal squabbles out of the estate issues. My sister in law likes to call up the attorney, CPA and investment professional when things are not to her satisfaction. These individuals bill their time accordingly, as would I. These bills get paid by our father's trust and our mother who is still with us. My brother and his wife absolutely need to see a marriage counselor and a retirement counselor because there are big changes coming their way. but your mother has the authority to tell them that her DIL is not in the group that is authorized to used their time with the trust paying for it.
|
|
bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,674
|
Post by bookkeeper on May 16, 2020 15:27:09 GMT -5
The CPA solved the problem by refusing to take her calls. The investment guy is a wise ass so he can deal with her once in a while and the commission is the same.
We all have our load to bear. Nobody's family is perfect. Unfortunately, I can predict that there will be more money conflict to come.
|
|