Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Gift Now or Inheritance Later
Old 06-23-2017, 05:43 PM   #1
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,474
Gift Now or Inheritance Later

GF and I are thinking that we should start gifting some of the estate to our children and grandchildren now rather than waiting till we pass to that great lawn chair in the sky.

We have more in assets than we could conceivably spend in the next 30 years along with pensions, profit sharing and SS to top off the tank. Given that most assets are in my name we also have a federal estate tax issue. We figure that gifting now will help the kids (all employed and on their own) while they can use it given their young families and in one case a low paying labor of love job. We have opened 529's for the grandchildren but would probably ramp up those contributions to further ease the parents pain at college time.

My parents have begun gifting now as they have a state estate tax issue. None of us kids need the money but it might have come in handy when we were younger which made me think our plan might be the right thing to do.

Any experiences or thoughts that anyone has would be greatly appreciated! And no, I am not looking to adopt anyone on this forum.
__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-23-2017, 05:57 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 4,172
Kind of a delicate balance between estate tax issues, need for the funds now, your joy in seeing the funds being used now and , if capital assets, stepup in basis on inheritance vs
no stepup if you gift. Determine the weighting factors for each and get your personal answer.
kaneohe is offline   Reply With Quote
Old 06-23-2017, 06:00 PM   #3
Recycles dryer sheets
GoodWishes's Avatar
 
Join Date: Jul 2013
Posts: 154
I agree with gifting earlier if you can afford to. We and our kids live in a HCOL area. When they are ready to buy their houses, we plan to gift the down payment. We haven't told them yet
GoodWishes is offline   Reply With Quote
Old 06-23-2017, 06:07 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Posts: 1,389
An irrevocable trust would move assets out of your estate today (especially useful if these assets have a good chance of appreciating in value in the future) while allowing you to fine-tune how the transferred assets impact your kids' and grandkids' lives. For example, income from assets transferred into the trust could be distributed annually or semi-annually to the beneficiaries, while the principal would be retained in the trust until some future date. Personally, I'm in favor of 'income supplementation' rather than 'asset windfalls', but each situation is unique.
socca is offline   Reply With Quote
Old 06-23-2017, 06:11 PM   #5
Thinks s/he gets paid by the post
Souschef's Avatar
 
Join Date: Dec 2015
Location: Santa Paula
Posts: 3,419
Quote:
Originally Posted by kaneohe View Post
Kind of a delicate balance between estate tax issues, need for the funds now, your joy in seeing the funds being used now and , if capital assets, stepup in basis on inheritance vs
no stepup if you gift. Determine the weighting factors for each and get your personal answer.
My Mom (rest her soul), said she would rather see the appreciation for a gift rather than give it after she passes.
I sort of have the same philosophy. Our 4 sons are in their 40's and 50's, and we feel they can use the money more now than when we pass.
I am taking my RMD and splitting it 4 ways, plus I have 529's set up for my grandsons and our granddaughter.
__________________
Retired Jan 2009 Have not looked back.
AA 60/35/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
Souschef is online now   Reply With Quote
Old 06-23-2017, 06:54 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 30,502
We prefer to gift now as we are able. The older we get, the more we hope to gift.

The nice thing about gifting is that amounts under $14K per person per year don't count against your estate. For a couple gifting that's $28K per individual.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 06-23-2017, 06:57 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: No. California
Posts: 1,817
I have been the recipient of gifting from my parents for many years, and greatly appreciated it. I just began gifting to my sons last year; they are 30 and 31 and greatly appreciate it as well.
KB is online now   Reply With Quote
Old 06-23-2017, 07:06 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
This is like the should we still support our grown child issue. Its so individual. I will say if it will bring you joy, and your not hindering their almost full potential, then do it now while your alive. I told my wife that if one of our grandchildren want to be a poet, artist, or some other usually low paying job, id like to fund it.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline   Reply With Quote
Old 06-23-2017, 07:07 PM   #9
Thinks s/he gets paid by the post
Souschef's Avatar
 
Join Date: Dec 2015
Location: Santa Paula
Posts: 3,419
Quote:
Originally Posted by audreyh1 View Post
We prefer to gift now as we are able. The older we get, the more we hope to gift.

The nice thing about gifting is that amounts under $14K per person per year don't count against your estate. For a couple gifting that's $28K per individual.
Also, If you are gifting to a couple, each one can get $28K from the 2 of you, for a total of $56K
__________________
Retired Jan 2009 Have not looked back.
AA 60/35/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
Souschef is online now   Reply With Quote
Old 06-23-2017, 07:15 PM   #10
Recycles dryer sheets
 
Join Date: May 2016
Location: Finger Lakes of NY
Posts: 136
Quote:
Originally Posted by audreyh1 View Post
We prefer to gift now as we are able. The older we get, the more we hope to gift.

The nice thing about gifting is that amounts under $14K per person per year don't count against your estate. For a couple gifting that's $28K per individual.

Don't count against your estate?? Not sure what that means?
LuckyDog is offline   Reply With Quote
Old 06-23-2017, 07:21 PM   #11
Full time employment: Posting here.
 
Join Date: Jul 2014
Posts: 814
Quote:
Originally Posted by LuckyDog View Post
Don't count against your estate?? Not sure what that means?
I believe, if you give above the $14,000 per person per year limit, the excess amount of the gift counts against your estate tax exemption. So when you die, you're only able to leave the then current federal exemption minus the aggregate "excess" amounts you've given during your lifetime.

However, you can give $14,000 per person per year without it impacting the federal exemption available on your death.
Katiek is online now   Reply With Quote
Old 06-23-2017, 07:23 PM   #12
Thinks s/he gets paid by the post
Souschef's Avatar
 
Join Date: Dec 2015
Location: Santa Paula
Posts: 3,419
Quote:
Originally Posted by Katiek View Post
I believe, if you give above the $14,000 per person per year limit, the excess amount of the gift counts against your estate tax exemption. So when you die, you're only able to leave the then current federal exemption minus the aggregate "excess" amounts you've given during your lifetime.

However, you can give $14,000 per person per year without it impacting the federal exemption available on your death.
The key thing is that you do not have to file a gift tax form if the amount is $14K or less. If it is more than $14K, the amount is counted against your exemption.
__________________
Retired Jan 2009 Have not looked back.
AA 60/35/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
Souschef is online now   Reply With Quote
Old 06-23-2017, 08:05 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 3,327
Quote:
Originally Posted by Souschef View Post
The key thing is that you do not have to file a gift tax form if the amount is $14K or less. If it is more than $14K, the amount is counted against your exemption.
Note that in time if you directly pay tuition at college for someone https://www.fastweb.com/financial-ai...oid-gift-taxes it is not counted as a gift:
The same also applies to paying someones medical bill. both are not gifts in terms of the gift tax.
meierlde is offline   Reply With Quote
Old 06-23-2017, 08:10 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 6,695
We fund the kids' Roths at $1k to $2k per year. We play it by ear if they need a house down-payment or to repay student loans. We may leave nothing to the kids in our wills. More likely we'll leave to our favorite charities. We'd rather give to the kids while we're alive. YMMV
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Gift Now or Inheritance Later
Old 06-23-2017, 08:29 PM   #15
Thinks s/he gets paid by the post
Fedup's Avatar
 
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
Gift Now or Inheritance Later

I did contribute some money to kid's account when they were working as a teenager. This year I gave my second kid graduation money but that's also as a Roth IRA. I'm very reluctant about gifting too much. They are both hard working but I certainly don't want to take that drive away from them. I will leave some inheritance money but by then they will be old like in their 50s or 60s. Yes I have one artist kid but she is not poor, but not rich either. There is a small inheritance that I will get from my mom's house in the short term horizon, which I'm still debating whether to slowly contribute to Roth IRA every year or invest in taxable account, potentially as a wedding gift. Still thinking about it.
__________________
Just another day in paradise
Fedup is offline   Reply With Quote
Old 06-23-2017, 09:00 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 30,502
Quote:
Originally Posted by Souschef View Post
Also, If you are gifting to a couple, each one can get $28K from the 2 of you, for a total of $56K
Sure.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 06-23-2017, 09:03 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 30,502
Quote:
Originally Posted by Blue Collar Guy View Post
This is like the should we still support our grown child issue. Its so individual. I will say if it will bring you joy, and your not hindering their almost full potential, then do it now while your alive. I told my wife that if one of our grandchildren want to be a poet, artist, or some other usually low paying job, id like to fund it.
We don't have any children, so our gifts are going to siblings not much younger than I (if they haven't reached their full potential - well, it's too late anyway). We don't want them to be too old to enjoy the money either.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 06-23-2017, 09:05 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 30,502
Quote:
Originally Posted by Katiek View Post
I believe, if you give above the $14,000 per person per year limit, the excess amount of the gift counts against your estate tax exemption. So when you die, you're only able to leave the then current federal exemption minus the aggregate "excess" amounts you've given during your lifetime.

However, you can give $14,000 per person per year without it impacting the federal exemption available on your death.
Right. The key thing, is that over many years you can gift quite a lot, and you will still have your full estate exemption to pass along after death.

I figure that for a couple with more than $10M in assets, this is a good way to keep the estate from getting too large.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 06-23-2017, 09:36 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
Quote:
Originally Posted by audreyh1 View Post
We don't have any children, so our gifts are going to siblings not much younger than I (if they haven't reached their full potential - well, it's too late anyway). We don't want them to be too old to enjoy the money either.
Then it sounds like it will bring you joy, and not hinder their potential. This meets the BCG's requirements.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline   Reply With Quote
Old 06-24-2017, 03:42 AM   #20
Thinks s/he gets paid by the post
 
Join Date: Oct 2013
Location: Oaxaca
Posts: 1,500
Quote:
Originally Posted by Blue Collar Guy View Post
I told my wife that if one of our grandchildren want to be a poet, artist, or some other usually low paying job, id like to fund it.
+1

Artists, poets and those pursuing other humanities (and I would argue humanitarian endeavors, as well) work tirelessly to create something important and meaningful. The effort expended on their craft and service to others is more than they ever will be compensated for.

But none of that matters to them. Because they’re creating art or serving those who are in need. And while the “reward” ($$) may never come, they will leave a legacy.

We live in a world that needs more than equations, explanations and bottom lines on a spreadsheet. Politics won't do it, neither will engineering, science, business, technology or finance.

The humanities allow us to see the invisible. They stir something deep within us in a way that no other experience can; providing a unique perspective and are what separates us from barbarians.

It is disappointing that these worthwhile pursuits, while invaluable to our collective humanity, generally receive little in the way of monetary compensation and are too often demeaned as lacking intrinsic value. I am encouraged that there are people like you willing to materially support your progeny in such endeavors!

Well done....
candrew is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
What to do? File taxes now or later? Bram FIRE and Money 8 04-12-2008 08:29 AM
pay tax now vs later, in taxable account JohnEyles FIRE and Money 13 09-19-2007 11:57 AM
Annuities: Now, later, never? ats5g FIRE and Money 1 10-30-2006 12:02 PM
"Buy now, foreclose later" Nords FIRE and Money 11 10-18-2005 10:00 AM
Social Security-Take It Now Or Later? haha Other topics 22 10-08-2004 03:36 PM

» Quick Links

 
All times are GMT -6. The time now is 08:33 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.