$433,000 Problem - Updated 1-30-18

[goalphish2002]

The short of it.  My grandparents transferred my dad a property in the hills of West VA.  It isn't worth much- a one bedroom log cabin on a small farm.  We are talking a "Deliverance" area of the hills.  My dad then transferred the property to my sister and me.  He is still alive and has living rights on the property. 

A gas company comes along...  Runs a line...  We are getting a check for $433,000.00. 

My grandparents now want to control it all.  We are being told to sign it over to my dad, who will distribute it amongst his siblings. 

I'm not happy about this.  The land is now worth even less- the gas company will have permanent easements through it.  My inheritance is shot.  I am being offered 10K for my troubles to sign it over.  It's such an insult, I don't even want it. 

***I haven't seen my grandparents in 20 years; they are very controlling and unpleasant people.  They were pretty verbally and physically abusive to me, as a child.  This seems like one more act of dominance before they die. 

To update:  I am signing it over to my Dad.  I couldn't get my sister on board.  As someone pointed out, I am the black sheep of the family.  It is strange being the one who has the most education and is financially doing well that I am not being asked to contribute my opinion.  After having it out with them both, I am resigning myself to letting it go.  I feel like they can all choke on it.  I know this doesn't sound strong or smart.  But, I almost feel a relief because I can legitimately cut some of these people out of my life for good.  It may have cost me a lot of money, but I wasn't expecting it anyway.

So, I talked to my father.  He now wants to give my sister and me about 100K.

I am going to meet with a CPA on this but would like to hear what you guys think.

He seems to think 15K a year is a way to fly under the radar.  I read a parent can gift 30K to married couples.  But, this is to fly under the radar if the person wants to give a cumulative of 5.49 million, which he doesn' have.  I can find any info on the receiver having to pay any taxes.

Can I take the 100K at once?  I just want my money now so I can get this all behind me.

[J Boogie]

I think you'll most of us here, CPAs aside, would defer to the advice of a qualified CPA on this one. Glad things seem to have worked out in a relatively fair way.

[goalphish2002]

I think you'll most of us here, CPAs aside, would defer to the advice of a qualified CPA on this one. Glad things seem to have worked out in a relatively fair way.

It is better than nothing.  But, my old man can change his mind on a dime.  It is why I want it all at once- as opposed to him leaking it to me slowly.

I will keep you guys updated.  I really appreciate the support you have given.  It has been stressful, to say the least.  You guys have helped- as you can tell, I don't have family that is competent enough to talk to about these things. 

[SC93]

It might now be $15k, I know it used to be $13k. He must gift $13k or $15k to you and then he can gift $13k or $15k to your wife. If you aren't married, then you can only do $13k/$15 a year.

Or, take it all at once and just pay the taxes on it.

[inline five]

There is no annual inheritance limit. Just a max. And it was doubled in 2018. You are nowhere near it. Just have a tax person do the paperwork, no need for a CPA.

[L2]

Don't quote me on it because I don't specialize in it, but without looking it up (and my vague memory from schooling/cpa exams), my understanding is that the 2018 annual exclusion is $15k per person. Anything over the annual exclusion simply requires the filing of a gift tax return (form 709). The donor doesn't need to pay tax until they exceed the lifetime allowance, which is pretty high - at least a couple million dollars.

[NoraLenderbee]

It might now be $15k, I know it used to be $13k. He must gift $13k or $15k to you and then he can gift $13k or $15k to your wife. If you aren't married, then you can only do $13k/$15 a year.

Or, take it all at once and just pay the taxes on it.

No no no! The recipient of the gift does not pay ANY tax.
If the gift is over $15K, the giver has to file a gift tax return (as L2 says). For $100K, your father will not owe any tax either. He just has to report it on the return.
There is no need to "fly under the radar."

[goalphish2002]

Thanks for weighing in everyone.  I thought that is how the article read.  Is this the same for federal and state?

[Catbert]

Don't quote me on it because I don't specialize in it, but without looking it up (and my vague memory from schooling/cpa exams), my understanding is that the 2018 annual exclusion is $15k per person. Anything over the annual exclusion simply requires the filing of a gift tax return (form 709). The donor doesn't need to pay tax until they exceed the lifetime allowance, which is pretty high - at least a couple million dollars.

Take the 100K ASAP.  No one will owe tax on the gift.  You don't need to do anything on your taxes.  Even if your Dad doesn't file the form that he should, no harm to you.  The 100K gift will likely fly under the radar and big whoop even if he gets caught. 

[Laura33]

Sorry, I am just catching up - I see that you are worrying about the gift tax implications of your dad giving you $100k, but what about the gift tax associated with you deeding the house back to him?  That strikes me as much more significant.  I think this whole situation just cries out for advice from a tax specialist.

[Cpa Cat]

Let me try to illustrate.

You sign over a check for half of $433,000 to your father. Despite the fact that you never deposit this cash, it's still yours, so you have given a gift of $216,500 to your father.

Your father decides to give you $100,000. It's debatable whether this is actually a different transaction if it happens quickly (but doesn't it make more sense to cash the check and give your father $116,500?). Anyway - the net result is probably a gift from you to your father of $116,500.

Or perhaps a gift from you to your father of $216,500 and then a gift from your father to you of $100,000 just so that the entire family can file gift tax returns?

Anyway - take your $100,000. Take it up front. Why would you even consider relying on your father to pay you $15,000 for the next who knows how long? My personal preference is if you cash your check and take your $100,000 up front. Why wouldn't you do that?

To be honest, this whole scenario makes me want to put my head in an oven. Maybe you should hire a CPA?

[MrUpwardlyMobile]

Let me try to illustrate.

You sign over a check for half of $433,000 to your father. Despite the fact that you never deposit this cash, it's still yours, so you have given a gift of $216,500 to your father.

Your father decides to give you $100,000. It's debatable whether this is actually a different transaction if it happens quickly (but doesn't it make more sense to cash the check and give your father $116,500?). Anyway - the net result is probably a gift from you to your father of $116,500.

Or perhaps a gift from you to your father of $216,500 and then a gift from your father to you of $100,000 just so that the entire family can file gift tax returns?

Anyway - take your $100,000. Take it up front. Why would you even consider relying on your father to pay you $15,000 for the next who knows how long? My personal preference is if you cash your check and take your $100,000 up front. Why wouldn't you do that?

To be honest, this whole scenario makes me want to put my head in an oven. Maybe you should hire a CPA?

there are a half dozen reasons why a lawyer should have been consulted,  the tax implications were secondary to the legal ramifications.

[GU]

Let me try to illustrate.

You sign over a check for half of $433,000 to your father. Despite the fact that you never deposit this cash, it's still yours, so you have given a gift of $216,500 to your father.

Your father decides to give you $100,000. It's debatable whether this is actually a different transaction if it happens quickly (but doesn't it make more sense to cash the check and give your father $116,500?). Anyway - the net result is probably a gift from you to your father of $116,500.

Or perhaps a gift from you to your father of $216,500 and then a gift from your father to you of $100,000 just so that the entire family can file gift tax returns?

Anyway - take your $100,000. Take it up front. Why would you even consider relying on your father to pay you $15,000 for the next who knows how long? My personal preference is if you cash your check and take your $100,000 up front. Why wouldn't you do that?

To be honest, this whole scenario makes me want to put my head in an oven. Maybe you should hire a CPA?

there are a half dozen reasons why a lawyer should have been consulted,  the tax implications were secondary to the legal ramifications.

+1

[Dicey]

All of this has me scratching my head and wondering who negotiated this deal anyway? Did  the utility company deal with the legally entitled party? Did someone just accept the first offer as if they were handed a winning lottery ticket? This may have been more money than they'd ever imagined the property would be worth, but is it actually a fair price? If this has been answered, I apologize, I must have missed it.

[goalphish2002]

All of this has me scratching my head and wondering who negotiated this deal anyway? Did  the utility company deal with the legally entitled party? Did someone just accept the first offer as if they were handed a winning lottery ticket? This may have been more money than they'd ever imagined the property would be worth, but is it actually a fair price? If this has been answered, I apologize, I must have missed it.

I live in GA.  I didn't know my father put the property in my name; it is in WV.  I've owned it for years without knowing I have a legal title with my sister, while he had living interest.  He worked with lawyers to negotiate everything.  How did all this happen without my input?  I wish I knew...  The settlement was made and I signed the paperwork to let my father deal with the money.  This is family politics.  I don't know how to explain it, other than that.  Why would he ask us to give him the money and then turn around just to give a portion back?  Because he and my grandparents are basically manipulative people.  They test everyone.  My grandparents are millionaires.  Despite the fact that we have no contact, I probably have some sort of other inheritance that they are holding.

I once had a girlfriend whose father took her sister out of the will because she didn't go to college.  She was actually a successful hairdresser.  It didn't matter.  Her sister was written out because she didn't do what he said.  Now, I am dealing with a similar, manipulative situation.

I am meeting with a CPA in GA today.  I am paying money out of my own pocket to see how I can tie up the loose ends. 

[Another Reader]

I am meeting with a CPA in GA today.  I am paying money out of my own pocket to see how I can tie up the loose ends.

That is the smartest thing you can do at this point.  It's too complicated and a mistake in how this is handled could be very expensive. 

[goalphish2002]

I am meeting with a CPA in GA today.  I am paying money out of my own pocket to see how I can tie up the loose ends.

That is the smartest thing you can do at this point.  It's too complicated and a mistake in how this is handled could be very expensive.

The problem is I can only advise my father on the information I am paying to get.  Since I relinquished control of the money, I am trying to help him figure this out.  It would have been easier had I cashed the check and dealt with all of it upfront.  But, again, my relationship with these people is so bizarre, I don't know where to begin.  I hope to obtain an approximate scenario of this for his tax purposes so he will cut me my portion.
 

[BFGirl]

Yeah...you need to talk to a lawyer as well.  Someone can't just foist a gift of property on you without some sort of acceptance on your part.  Otherwise, everyone who had contaminated land would do a deed to their worst enemy.  Please be smart about this.