My M-I-L is a bum. Wife's 92 year old grandfather is a 100% disabled veteran with $100K in the bank, a $200K house and a 2nd $85K house (in terrible shape). MIL lives in the 2nd house and is destroying it daily. The house needs $7500 in roof repair and we are close to writing a check for it. So, here are my questions:
1) Wife's grandpa has $100K in the bank and wants to give everything above $100k each month to my wife. We don't really need the money so we will invest the $3,00-$4,000 per month (his pension, VA benefits, SS, etc) in stocks to take care of my MIL (remember, she is a bum) in the future. I don't really understand gift tax and think that he will have to pay gift tax on the $36K-$48K per year but maybe that falls under lifetime gift tax exemption and he will pay nothing. The principals here are Grandpa, my wife, me and MIL. Can we take $48K per year without involving the IRS (other than filling out some forms on April 15th)?
2) Did I mention MIL is a bum? She is destroying the house and wife's grandpa wants it out of his name due to stress/sanity. One idea is to have him repair the roof (I guess raising his cost basis) and then transferring the house into her name. The house was purchased for around $80K and would be worth ~$120K in good shape (it is DEFINITELY not in good shape, not even fair shape). It would probably assess right now without the repairs for $75K. She lives on a small SS, food stamps and $200 or so per month that he gives her. He pays all taxes, insurance, etc on the car/house.
What is the best way to get it into her name with minimal tax consequences? This is a 2nd home (has owned it for years) and is paid for. He is in Florida and she/house is in South Carolina. I don't know about recent years but in the past he was keeping receipts to prove that he was spending time in the house each year. I don't know how that affects anything.
I know these are some rough questions and I really need expert advice but it would be very nice to hear your suggestions. Thanks!
1) Wife's grandpa has $100K in the bank and wants to give everything above $100k each month to my wife. We don't really need the money so we will invest the $3,00-$4,000 per month (his pension, VA benefits, SS, etc) in stocks to take care of my MIL (remember, she is a bum) in the future. I don't really understand gift tax and think that he will have to pay gift tax on the $36K-$48K per year but maybe that falls under lifetime gift tax exemption and he will pay nothing. The principals here are Grandpa, my wife, me and MIL. Can we take $48K per year without involving the IRS (other than filling out some forms on April 15th)?
2) Did I mention MIL is a bum? She is destroying the house and wife's grandpa wants it out of his name due to stress/sanity. One idea is to have him repair the roof (I guess raising his cost basis) and then transferring the house into her name. The house was purchased for around $80K and would be worth ~$120K in good shape (it is DEFINITELY not in good shape, not even fair shape). It would probably assess right now without the repairs for $75K. She lives on a small SS, food stamps and $200 or so per month that he gives her. He pays all taxes, insurance, etc on the car/house.
What is the best way to get it into her name with minimal tax consequences? This is a 2nd home (has owned it for years) and is paid for. He is in Florida and she/house is in South Carolina. I don't know about recent years but in the past he was keeping receipts to prove that he was spending time in the house each year. I don't know how that affects anything.
I know these are some rough questions and I really need expert advice but it would be very nice to hear your suggestions. Thanks!