• Go to page :
  • 1 23
  • Text Only
Voting History
rated:
My grandparents are getting older. Two of them are nearing 90 and the others nearing 80. My parents are expected to get a huge sum of money from them in the coming future. I would think that they have already prepared to bend the rules a little bit by not paying the inheritance tax; however, what seems to be the best option of getting the large gifts besides the 13 thousands dollars a year tax free allowance?

Member Summary
Most Recent Posts
In the case of the third example above, federal estate tax liability will be reduced because the estate tax charitable d... (more)

RonK (Jun. 02, 2010 @ 9:00a) |

Silverfishva,
It seems to have been picked up again. There is good information here (for the most part) and I doubt peop... (more)

jordge (Jun. 02, 2010 @ 9:25a) |

jkimcpa (Jun. 02, 2010 @ 12:22p) |

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.
Thanks for visiting FatWallet.com. Join for free to remove this ad.

Refuse to accept the inheritance and/or give it to charity.

silverfishva said: My grandparents are getting older. Two of them are nearing 90 and the others nearing 80. My parents are expected to get a huge sum of money from them in the coming future. I would think that they have already prepared to bend the rules a little bit by not paying the inheritance tax; however, what seems to be the best option of getting the large gifts besides the 13 thousands dollars a year tax free allowance? What exactly is a "huge sum of money"??

Do you even know what the estate tax limits will be when they die and whether all the assets will fall under the limit?

Do you know that POD accounts avoid probate and go directly to the named POD beneficiary?

We need to know how much is in bank accounts, and how much is in other property (RE, etc) since there might be no estate tax to be paid,

Put them on life support and pull the plug when the inheritance tax laws are relaxed.

Disclaimer: This idea may cost more than the taxes.

SUCKISSTAPLES said: silverfishva said: My grandparents are getting older. Two of them are nearing 90 and the others nearing 80. My parents are expected to get a huge sum of money from them in the coming future. I would think that they have already prepared to bend the rules a little bit by not paying the inheritance tax; however, what seems to be the best option of getting the large gifts besides the 13 thousands dollars a year tax free allowance? What exactly is a "huge sum of money"??

Do you even know what the estate tax limits will be when they die and whether all the assets will fall under the limit?

Do you know that POD accounts avoid probate and go directly to the named POD beneficiary?

We need to know how much is in bank accounts, and how much is in other property (RE, etc) since there might be no estate tax to be paid,

That is undisclosed information. All I know is that we will have to pay estate taxes.

I heard that 2010 is the only year you don't have to pay estate taxes if your heirs die that year?

There is a wide variety of things you can do to reduce estate tax. If there is a huge sum involved, the grandparents should be talking to estate planning professionals, preferably lawyers.

We could start listing things you can do -- give large taxable gifts (so that the gift tax comes out of the estate), transfer assets to a family limited partnership (to be able to argue for a lower valuation), throw a big funeral -- but these aren't much use without knowing all of their details.

silverfishva said: I heard that 2010 is the only year you don't have to pay estate taxes if your heirs die that year?Is that like the "where do they bury the survivors" riddle?

Up, Up, Down, Down, Left, Right, Left, Right, B, A, Start

Or ...........................................B, A, Select, Start if the inheritance is for 2 people.

Pay your taxes, deadbeat!

If the amount is less than 1 million dollars, then don't worry. That's the exemption set to take effect in 2011.

If it's greater than $1 million, then call an estate planning attorney.

Yes, there are ways to shelter assets from the estate tax (Lawyers don't refer to these as "tricks" or "dodges", because they're perfectly legal estate planning tools). Depending on your particular situation, you can minimize or eliminate the estate tax. Call a lawyer in your (and/or your grandparents') jurisdiction.

There are all types of legal ways involving irrevocable off-shore trusts and whole life insurance policies, but they should have started years ago. Visit an estate lawyer or a financial planner who specializes in estate tax strategies.

I seriously doubt the $1M estate tax exemption for 2011 will remain as it is. It was up to what $3.5 M last year? I predict similar levels will be established before end of this year.

Again, if you dont know how much is this "huge sum" there isnt anything you can do. Your grandparents will need to take action since only they know how much we are talking abou.

Thought about helping them move on before the end of the year? That way you can get their money sooner and avoid taxes on it...

If you won't disclose the amount the only real advice we can give you is get a lawyer who can put it in a shelter. Unless you are one (and therefore do NOT need this advice) you need a lawyer to get away with it.

LH2004 said: There is a wide variety of things you can do to reduce estate tax. If there is a huge sum involved, the grandparents should be talking to estate planning professionals, preferably lawyers.

We could start listing things you can do -- give large taxable gifts (so that the gift tax comes out of the estate), transfer assets to a family limited partnership (to be able to argue for a lower valuation), throw a big funeral -- but these aren't much use without knowing all of their details.
This is great advice.

Note: the marginal rate for estate tax can get close to 50% of the taxable estate so paying for an estate plan is often well worth it.

I don't think 2010 will end up being zero estate tax either, or has it been decided?

nycll said: I don't think 2010 will end up being zero estate tax either, or has it been decided?
As of right now it is zero, But don't going killing the seniors just yet. They could change it and make it retroactive to Jan 1 2010. I think the future tax will depend a lot on the 2010 Elections.

yep, no estate tax if you die this year.

Will be interesting to see when the statistics come out about the increase in elder deaths the the last quarter of this year.

But next year it goes back to 55%!

Get a living trust, it's worth the money it costs.

Exception was indeed $3.5M in 2009 & top rate that year was 45%.

handyguy said: But next year it goes back to 55%?
Yes and only first million exempted.

It will be kind of depressing to want two of your 90 year old grandparents to die this year because of the zero percent estate taxes. I am not hoping for them to do so but to see them suffer of old age and die the next year, 2011, is even worse

silverfishva said: I am not hoping for them to do so but to see them suffer of old age and die the next year, 2011, is even worse
Why don't you leave that up to them.

Admittedly nieve on this topic but what prevents the grandparents from going to the bank, withdrawing cash, and handing it over to their heirs? How would the government know where the cash went and thus how would they know who to tax? You could always claim you had a gambling problem couldn't you?

I don't want to carry around a couple bricks of cash. Plus, people starting asking questions when you make transactions involving large amounts of cash.

Skyvue said: Admittedly nieve on this topic but what prevents the grandparents from going to the bank, withdrawing cash, and handing it over to their heirs? How would the government know where the cash went and thus how would they know who to tax? You could always claim you had a gambling problem couldn't you?
That's called a gift and the IRS will know if you have received that much money. You will need to report it and claim it as a gift. You will have to pay taxes for it as well unless it is under 12 thousands dollars for each year.

13k, and generally the donor pays the tax, not the recipient.

No, no one pays any tax. Everyone always thinks someone needs to pay some tax if they give more than 13k a year....

It simply goes against the million dollar lifetime exemption. NO TAXES ACTUALLY NEED TO BE PAID BY ANYONE unless the grandparents are giving more than a million dollars.

This is a very common myth that needs to stop spreading NOW

Stay alive?

SUCKISSTAPLES said: No, no one pays any tax. Everyone always thinks someone needs to pay some tax if they give more than 13k a year....

It simply goes against the million dollar lifetime exemption. NO TAXES ACTUALLY NEED TO BE PAID BY ANYONE unless the grandparents are giving more than a million dollars.

This is a very common myth that needs to stop spreading NOW


My question is how in the heck is the IRS going to know what happened to that cash? You can't simply withdraw the cash and then do nothing?

pthor1231 said: I don't want to carry around a couple bricks of cash. Plus, people starting asking questions when you make transactions involving large amounts of cash.

What people? When do they ask? Why should I have to tell anybody what I did with MY cash?

Of course you can withdraw your cash.

The bank is likely to question an elderly person withdrawing large sums of cash, as there are many elder scams going around and banks are facing increasing pressure to "find out" whats happening when an elderly person makes a large withdrawal that doesnt fit in with their normal banking pattern.

besides just asking the customer, The bank will be required to fill out govt forms for such a large withdrawal (and if you "structure" smaller transactions to avoid this reporting, thats another issue). The IRS may or may not then question the person who withdrew the cash and ask them what they did with it.

They can be honest or they can lie, but yes the IRS can indeed find out when someone withdraws a large sum of cash and gives it to someone else. And most recipients dont keep the cash under the mattress, they deposit it. Large cash deposits are also questioned by the IRS, and again, the recipient will be faced with a choice of whether to tell the truth or not.

Skyvue said:

What people? When do they ask? Why should I have to tell anybody what I did with MY cash?

I would just tell them I blew it all on H&B

SUCKISSTAPLES said: No, no one pays any tax. Everyone always thinks someone needs to pay some tax if they give more than 13k a year....

It simply goes against the million dollar lifetime exemption. NO TAXES ACTUALLY NEED TO BE PAID BY ANYONE unless the grandparents are giving more than a million dollars.

This is a very common myth that needs to stop spreading NOW
Yes, that is absolutely true.

But for the sake of completeness, it also needs to be pointed out that each dollar of the $1 million lifetime gift tax exemption that you use up also reduces your estate tax exemption by one dollar. So, if your goal is to reduce or avoid estate taxes, using the lifetime gift tax exemption will not work.

On the other hand, using the $13k per recipient annual gift tax exemption has no effect on your estate tax. So that can be an effective means of getting dollars out of the estate.

RS4Rings said: Skyvue said:

What people? When do they ask? Why should I have to tell anybody what I did with MY cash?

I would just tell them I blew it all on H&B
yeah but in your case it would probably be true

Hey, if you are inheriting more than 3.5 that will fix you for the rest of your life....you should pay
taxes over that. There is no more free ride pal.

Also, you can do a lot with the 13k exemption. For instance, if you are married, then your grandfather can give you $13k and your wife 13k. Likewise, your grandmother can do the same thing, so that would be $52k right there that is taken out of the taxable estate just to your immediate family. Add in your parents, their siblings, your siblings, and everyone's spouses, and children, etc., and that is a lot of money that can be gifted each year that would not go against the $1 million lifetime exemption.

Rathipon said: Also, you can do a lot with the 13k exemption. For instance, if you are married, then your grandfather can give you $13k and your wife 13k. Likewise, your grandmother can do the same thing, so that would be $52k right there that is taken out of the taxable estate just to your immediate family. Add in your parents, their siblings, your siblings, and everyone's spouses, and children, etc., and that is a lot of money that can be gifted each year that would not go against the $1 million lifetime exemption.

Are you supposed to tell the IRS about these gifts when you do your taxes or only be ready to explain if they come around asking questions?

just have documentation if asked... you do not need to report it proactively.

belgique said: Hey, if you are inheriting more than 3.5 that will fix you for the rest of your life....you should pay
taxes over that. There is no more free ride pal.

Taxes were paid when the money was earned, Why should it get taxed again?

Skipping 62 Messages...



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014