Anyone expecting an inheritance?

[shiny]

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Originally Posted by Laurence So my parents and grandmother and aunt came down today to visit Tori (oh yeah, and us too) and I just couldn't bring it up. Maybe I'll just send an email detailing our special needs trust idea.

You'll know when the time is right. I never bring up inheritence/will issues with my parents, but they sometimes bring it up with me... maybe if your parents do the same you will mention the trust and what you are thinking. Then they will probably say they want to help with that too and it will be "their idea" and work best for everyone. It would probably give them some peace-of-mind knowing that Tori's future is being planned for.

[farmerEd]

I am curious about inheritances and how they work...my parents will leave me nothing, except maybe the bill from the undertaker, but my wifes folks may leave us a meager amount ($100K or so)...not enough to be overly concerned about...but, I am curious if one receives an inheritance, does the "income" need to be reported anyplace?

In particular, I am planning ahead for college expenses for my 4 kids(10 years away)...I can do all the planning I want, keep money sheltered in home equity and tax-sheltered accounts, but if 2 months before I fill out the FAFSA application a $100K chunk of change falls into my checking account its going to significantly change the need profile. Could you quickly spend the money? can you time the actual distribution of the money from the estate? Just curious what ones options wold be...it may be a mute point when the time comes anyway, and we may not qualify for aid in either case, but its nice to plan these things or at least know what the implications are.

[ladelfina]

Yes. But I didn't put it into FireCalc.

I liked Helen's response:

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Inheritance is such a bitter sweet thing. Oddly I think knowing that I will inheritant a large chunk of change is what is motivating me with a fever to reach FI. The only way I can accept the money without guilt is proving to myself that I don't need it. And, I feel they handed me so much in life by paying for my education and being such good parents. I have a need to reach FI without a gift from my folks. I really, really wish they had spent more of their money while they were young and healthy.

My parents have/had been a bit schizophrenic in talking to us kids about money. Like it was "there" but "not there" at the same time, which confounded me in the past, but in retrospect I understand and appreciate that tack. When I was in my 20's my father handed over control of a decent, but not overwhelming, sum which had started out under the UGMA. So I always knew I had a bit of a cushion that others didn't necessarily have, but it wasn't enough to live off of by a long shot. Fast-forward 20 years and what with work, a favorable RE market, and decently-performing investments here I am.

In the past I haven't always been super-frugal, but I "never touched principal"... My parent's LBYM ways have mostly stuck.. and I got addicted to that early feeling of independence.. independence from debt.. knowing that if I got fired or, later, if my business went under, I wouldn't starve, at least for a while. I was determined never to lose that feeling of being safely away from the edge!!

Now mom is doing ok for now on her own, but is not in the best of health. We visited a super-nice LTC place near sis, but she seems to have decided to stay in her own home as long as possible (I'd be happier if she spent the $$ on the LTC). I keep wondering how much of that decision has to do with wanting to preserve the egg for us, instead of using it to make her own life easier. I tell her that we are doing fine, and that we fortunately don't need her cash, but I'm not sure how much of that is getting through. She seems to be making the decision based on her current comfort level and independence, plus not leaving the neighborhood, friends, and doctors she knows, plus there's the initialization hump of moving to a new state which means new lawyer, new will, new DL, new insurance. She said she just doesn't want to deal with all that... understandable... but if I'm left with the feeling that's she's doing it to save $$ for us in the long run, I will feel guilty.. like it's 'blood money'.. even though that's not rational since it's her free choice.

We are talking about a woman who, when my dad bought her a fur coat in the '70s, insisted on buying two "so that you each could have one" when she died. When my dad bought her a ring, she chose one with 2 sapphires encircled by small diamonds "so that you can add a couple of diamonds and make two rings". That's her mentality.

So, yes, I'm counting on some inheritance (there's a pass-through trust from my dad that sis & I will split -- we are in the dark as to the amount) but frankly, I hope that my mom feels free to use her stash to make her own life more comfortable...

Strangely, she worries constantly about taxes, in particular inheritance taxes, though even back when the limits were lower we weren't talking about a horrendous sum.. maybe $50-60k. She was once talking about moving to Florida just so we could save that $50k later on?!??! Arggh. In the meantime, she could be gifting out, what is it now?.. $12k p.a. each to both of us and our DHs, and I assume to my sister's kids.. But she restricts it to some portion of that to me and sis.. there's a block about gifting to our husbands.. I mentioned this tax-avoidance discrepancy in passing when we were on the subject, but it let it drop since I didn't want to look greedy (plus I got a glaring look!). Earth to mom: DH and I have a joint account.. cough it up!! (kidding!)

Wierdly, too.. she appears to be living mostly on the proceeds of the pass-through trust, while her taxable $$ grows (slowly, since she's probably in mostly treasuries and muni bonds). Nor do I think she examines the trust performance, just accepts what the bank (trustee) portions out. Whaddaya gonna do?

OldMcD: $100k = "meager" But that's the median net worth of an American family, it seems.. so... all in all, nothing to sneeze at. As far as the IRS is concerned you don't report it since the taxes are the responsibility of the estate. You could in theory spend the money to keep it off what you're obliged to report to the financial aid people, but since they do look at big ticket assets like cars and real estate, I don't know how much that will help.. maybe buy a boat? You'd have to review the particular application's forms to see what they ask.

[donheff]

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Originally Posted by OldMcDonald I am curious about inheritances and how they work...my parents will leave me nothing, except maybe the bill from the undertaker, but my wifes folks may leave us a meager amount ($100K or so)...not enough to be overly concerned about...but, I am curious if one receives an inheritance, does the "income" need to be reported anyplace?

The money will pass to the heirs tax free up to the estate tax limitation - far above that level. If any of it has capital gains due, the value will be "stepped up" to current market value so when you sell you will not owe cap gains on the rise during their ownership.

[mickeyd]

Hey bostonjoe,

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I am struggling to maintain a plan which does not include this windfall.

Assuming that you or the spouse will end up with a windfall inheritance, and integrating that assumption into ones financial plan is pure folly. IMHO, you should NEVER assume that you will get anything from your departed loved ones.

It should always be a windfall, and a happy one at that.

[bostonjoe]

Yeah, I said I was struggling but I'm winning the battle. Although I can from time to time go off daydreaming about the possibilities, I save all I can. In fact I just shifted a 4% raise to my 401k, maxing out the annual deduction allowed.
Wasn't I supposed to buy a bigger TV or something? I'd hate to slow down the economy.

[youbet]

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Originally Posted by Khan A coworker told a story of inheritance. His grandmother was in a care facility of some sort and changed her will to leave half to the hairdresser who visited there. It was $1 million or so. He had apparently been doing this with other old women and had received small amounts; this one was the jackpot.

So....... in some cases it might pay to visit grandma in the care facility from time to time? Kids who assume gramdma's or mom's or whoever's will is locked in and they are going to get the big bux despite not really liking grandma or mom or whoever and never visiting just might get disappointed! It is so funny.........

[ziggy29]

Yes, I should receive a portion of mom's estate when she passes. Hopefully I won't get it for a long time. Right now my share would probably come to about $100K. I do not include this in my financial planning anywhere, nor do I want it any time soon.

[lazygood4nothinbum]

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Originally Posted by OldMcDonald I am planning ahead for college expenses for my 4 kids(10 years away)...I can do all the planning I want, keep money sheltered in home equity and tax-sheltered accounts, but if 2 months before I fill out the FAFSA application a $100K chunk of change falls into my checking account its going to significantly change the need profile.

dead people are soooo rude. they always pick the most inconvenient time to die. the really thoughtless ones die and leave you a house to sell right when housing turns bad. talk about poor market timing.

never mind that they have the nerve to die while i'm still alive. it's like someone walking away from you while you are in the middle of a conversation. this is why when people die, the first place they go is charm school to learn some manners.

but you bring up a good point that i didn't consider and have a call into uncle accountant as i'm typing this. at what point do i become responsible for taxes paid on interest accrued since i inherited, even though we are still in probate on part of the estate. because basically, at death, it became mine.

edit: just heard back from uncle. basically, i am only responsible for taxes as items are put in my name. the estate pays taxes up until then. so it sounds like as soon as that $100k is put in your name, it and all the good & bad that goes along with that is yours.

as an example. for now, i only owe taxes on interest paid from the insurance policy which i already collected . i do not owe, of course, on the ira where i only pay taxes when i withdraw funds. but also i don't owe any 2006 taxes on non-ira funds which are still in probate. rather the estate will pay taxes on that.

[ladelfina]

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dead people are soooo rude. they always pick the most inconvenient time to die. the really thoughtless ones die and leave you a house to sell right when housing turns bad. talk about poor market timing.

: : :

You're so right, LG4NB.. At the end of my msg. I had written "buy a boat or just do the right thing and fund your kid's education with the $100k.." but I erased it, not wanting to offend. Rethinking it, I'M offended that anyone who thinks $100k is "meager" is even applying for financial aid!

Very interesting about the interest and tax obligations while the estate is in limbo.
I wonder how long the average estate takes to settle among the different states.. in an 'average' case where there are decent assets but nothing complicated: house & accounts, valid will, no business, no contestations...

[chinaco]

Maybe... but not counting on it. If and/or when it happens, it will be gravy... Since we will be able to manage comfortably with out it, (if it happens) we will probably use it for some extravagance that we might not normally purchase. By that I mean some form of leisure item (where part of the expense can be recovered). For example a vacation home or a boat (used of course). Or we might just travel "in style".

My philosophy is that when I get really old (hopefully healthy) I will likely be spending much less (because we will slow down), so I want to enjoy myself as much as I can while I am younger (and healthy) without jeopardizing my old age life style. I have observed my parents and other relatives as they age and pass on... there are lessons to be learned from those experiences!

The only things lurking out there (in the far future) are death, poor health and possibly a nursing home. So........... Carpe Deim

[Moemg]

[

Very interesting about the interest and tax obligations while the estate is in limbo.
I wonder how long the average estate takes to settle among the different states.. in an 'average' case where there are decent assets but nothing complicated: house & accounts, valid will, no business, no contestations...
[/quote]

My late husbands estate took three years to settle.I now know the value of trusts .

[BarbaraAnne]

My mother's estate took about 4 weeks to settle. All of her assets were in CD's or treasuries. My parents (several years before my father's death) had done the necessary preparations (wills, living wills, etc) so as not to burden family members. They had sold their home previously so there was no property to sell. When everything is in place and the assets are cash equivilents it is easy, fast and inexpensive to settle an estate. It was fortunate that it was all set up before my mother developed alzheimers. I can appreciate how difficult it is for lazyg4nb to deal with his mom's estate after taking care of her during her long illness...my sincerest sympathies.

[lazygood4nothinbum]

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Originally Posted by ladelfina I wonder how long the average estate takes to settle among the different states.. in an 'average' case where there are decent assets but nothing complicated: house & accounts, valid will, no business, no contestations...

everything previously put into order here & as written into mom's will, anyone contesting the will should be "considered to have predeceased me", not that there'd have been any of that in any case as my brother & i are in complete.

probate ends late march so the settlement will have taken about 6 months and cost between $10-20k. house inherited in bad market (how rude), my guess is a year to sell. (though surprised already getting inquiries from developers.)

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Originally Posted by BarbaraAnne ... before my mother developed alzheimers. I can appreciate how difficult it is for lazyg4nb to deal with his mom's estate after taking care of her during her long illness...my sincerest sympathies.

thanx barbaraanne and likewise. i very much am looking foward to having this done with so that i will be better able to move on. i've only even been to the house about twice since mom died. i don't know how people keep a house in their family for consecutive generations. we had so many good times there. for me it is too sad.

i remember when my best buddy died and it was six months to a year before i went near the intracoastal waterway even though it is just blocks away. i didn't even realize i was avoiding it until one day i found myself going over one of the bridges to a1a. that area was our playground for so many years and my heart skipped a beat when i realized i hadn't been there since his death. i'm way too emotional for this crap.

this is why i really just have to turn my life into one big ol' happy party. much better to go through life laughing than crying. this crying stuff sucks.

[laurence]

In many ways my daughter is a blessing. Alzheimers and other debilitating conditions can be so heart wrenching. Down Syndrome, more specifically the gene that carries it is often called the Sunshine Gene, because in there way they understand their world, can relate to it, and enjoy it immensely.

My mother suggested it might be best Tori not get heart surgery when she was first born ( implicating it might be best she not live at all than live like that). Now my mom - staunch athiest that she is (was?)- is saying crazy things like Down Syndrome kids bring are here to bring light into the world. Amazing.

[lazygood4nothinbum]

similar to your mom, i would personally rather die than live through alzheimer's. it's taxing enough that i have so much trouble getting a decent date on a saturday night. whether atheist, religious or spiritualist, nobody in touch with their own heart wants to see another live the difficult life and there are lots of ways of expressing that.

we want paradise, not poverty. lives filled with wonderful memories, not ones taken away by alzheimer's. we want a prodigy child, not children born with built-in stumbling blocks. but that's not what we get. so whenever we can, we try to make our lives and the lives of our loved ones as easy going as possible; because we know that so much of life is struggle even when you are born to advantage.

just think as to how much worry you have for your tori after you are gone and what you will do to secure her safe & happy future. if your mother had any wish it sounds to me like it was also driven by the very same urge to protect & secure & keep happy her family.

yet even while we don't want to see anyone suffer, there is a buddhist meditation whereby you ask for more adversity to come into your own life as this provides the opportunity for you to practice your compassion. perhaps now that your mother sees how well you are handling your responsiblities, she is better able to glow in that.

but just in case you want to hold that over her head, what a great lead-in to asking about tori's inheritance.

[youbet]

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Originally Posted by Laurence I'm not super comfortable talking with them about it, it feels mercenary.

I guess I'm confused about this. Other than perhaps discussing setting up a trust for Tori, what is there to talk about with them?

My oldest grandson is afflicted with cerebral palsey and will need support for his entire life. Per my preliminary research, placing this support in a trust is beneficial in that it does not have to be spent before other sources of aid can come into play but rather used as a supplement to other sources of aid. Educating yourself about these things and sharing with your folks would be appropriate. That's where I'm at with my son.

Past that, your folks need to learn to spend and enjoy......for themselves.

[Meadbh]

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Originally Posted by Laurence In many ways my daughter is a blessing. Alzheimers and other debilitating conditions can be so heart wrenching. Down Syndrome, more specifically the gene that carries it is often called the Sunshine Gene, because in there way they understand their world, can relate to it, and enjoy it immensely. My mother suggested it might be best Tori not get heart surgery when she was first born ( implicating it might be best she not live at all than live like that). Now my mom - staunch athiest that she is (was?)- is saying crazy things like Down Syndrome kids bring are here to bring light into the world. Amazing.

Laurence, based on your posts, Tori seems to be bringing a whole lot of light into your world!