Inheritance Drama: You Got Any? Stories Wanted.

[radram]

Personally, I'm of the mind that estates should pass how the person who has the estate wants, and the state has no right to that money.  If the person who earned or otherwise held the money thinks it should go to their Paris Hilton-esque daughter to blow in a lifetime of partying and drugs and bullshit, so be it; I don't think the government should get their greedy hooks in it.

Yeah, I don't quite understand it either.  If the wealthy person decides to spend the money on a yacht or a mansion or a Bentley or eating at fancy restaurants, there's no extra tax.  But if they want to give it to their kids (upon their death), then the tax man demands an extra pound of flesh.  You can do the whole $14k-per-year thing, but it's not practical for large estates, and you also run the risk of depleting your assets too soon if you live too long.

Other than a blatant grab for cash, what's the purpose behind an inheritance tax?  What is the negative outcome that such a tax is preventing?

I do not understand either of these positions, and I sincerely ask for clarity. Other than the "all taxes are evil" position, I come to this discussion with the premise that SOME taxes are a necessity and the only decision is to be what we tax (losers), and what we do not tax(winners), and of course the percentages of said necessities. If it helps in the conversation, assume that the federal government needs $1(one) dollar to operate on an annual basis, and we are determining the best way to fund it fairly.

I do not understand why the entirety of someone's estate is to automatically be put into the winners column. I understand a certain amount excluded, I would understand treating already taxed net worth differently than unrealized capital gains. I would also understand keeping the original cost basis to defer taxes in order to prevent a forced sale of a family business. I respectfully ask for both of you to further explain why you feel my position is incorrect.

Do you both agree that unrealized gains should continue to be taxed at 0% and stepped up in basis for the first $5 million? What about after that amount. Current taxes for the living maxes out at 20% for long term capital gains, but 39.6% for income. What are your positions as to why this is "fair"?  Max inheritance tax is 40%, very similar to the max income rates. Why should capital gains be taxed at a lower rate than income. To that end, why should my rental income be treated as regular income, but my dividends are not? Why shouldn't all income taxed the same?

Would you both agree that the cost basis should not be taxed at all since it has already been taxed, but any gains, unrealized or not, should eventually be taxed. That may be by the beneficiary when they eventually sell at the ORIGINAL cost basis with the profit taxed at their tax rate.

Why should anyone receive any gain without being taxed eventually, minus reasonable exclusions like primary residence home selling or the multi-millions in inheritance exclusion from taxes as examples?

If I take my income, after it is taxed, and hire someone to do work for me, they will also be taxed on THEIR income. That was originally simply MY already taxed income. I would argue this money should not be taxed well before inheritance money is excluded, they at least did something for it. Why should an inheritance get MORE favorable treatment than labor?

[iris lily]

I have a positive story. Recently we learned that DH's sister updated the will of she and her husband. They have two children, one of whom Is estranged. The not- estranged child insisted that his sister be named as equally inheriting. He said "if you dont give her half, I will give her half when you die anyway, so either way she's going to get half."

He is a good kid. They are both good kids.

The estranged one is a solid citizen, she is just permenantly mad at her parents for reasons I no longer try to understand. She would not blow the money, and there is a fair amount, probably a couple million.

[TheGrimSqueaker]

Personally, I'm of the mind that estates should pass how the person who has the estate wants, and the state has no right to that money.  If the person who earned or otherwise held the money thinks it should go to their Paris Hilton-esque daughter to blow in a lifetime of partying and drugs and bullshit, so be it; I don't think the government should get their greedy hooks in it.

Yeah, I don't quite understand it either.  If the wealthy person decides to spend the money on a yacht or a mansion or a Bentley or eating at fancy restaurants, there's no extra tax.  But if they want to give it to their kids (upon their death), then the tax man demands an extra pound of flesh.  You can do the whole $14k-per-year thing, but it's not practical for large estates, and you also run the risk of depleting your assets too soon if you live too long.

Other than a blatant grab for cash, what's the purpose behind an inheritance tax?  What is the negative outcome that such a tax is preventing?

So far as I know, everything you mentioned is taxed. There are indeed taxes on real estate (property tax and sometimes state tax), on vehicles (registration and state taxes), at restaurants (sales taxes), and any other way a person might spend the money. Hookers and blow might be the exception, but only because people who sell illegal things aren't known for being proactive in collecting and remitting tax. If there was a viable way to tax hookers and blow, governments would do that too.

[secondcor521]

You can do the whole $14k-per-year thing, but it's not practical for large estates, and you also run the risk of depleting your assets too soon if you live too long.

Anybody who is in federal estate tax territory is NOT going to deplete their assets by giving their kids/grandkids 14k/year.   As noted upthread, state taxes may be a different ballgame.

I don't see why this isn't practical.   Seems like an excellent way for those near the federal taxable thresholds to ensure they limit the taxes and maximize money going to the family.

After consultation with a CPA, we are doing this - well, at least we are prepared to do this - in my family.  529 5-year gifting is also another excellent addition to the tool set.

The two tricks seem to be to be aware of the situation before the crossover point and have enough beneficiaries that you like.  If you only have one kid and your estate is growing at 10% through the ~$5.5M estate tax exemption number that is growing at inflation, you're going to have a problem because you can't give the money away fast enough.  In our particular scenario, the estate is expected to grow at about 8% and there are 12 beneficiaries, and so if we see it getting close to the limit, full-on gifting to everyone can keep it below the limit.

We also are careful not to go to far the other way; it is a first priority that the money is there to take care of the person who worked very hard to earn it his entire life.  In our case it doesn't look like this will be a problem.

No state inheritance or estate taxes in our case.

[TomTX]

Personally, I'm of the mind that estates should pass how the person who has the estate wants, and the state has no right to that money.  If the person who earned or otherwise held the money thinks it should go to their Paris Hilton-esque daughter to blow in a lifetime of partying and drugs and bullshit, so be it; I don't think the government should get their greedy hooks in it.

Yeah, I don't quite understand it either.  If the wealthy person decides to spend the money on a yacht or a mansion or a Bentley or eating at fancy restaurants, there's no extra tax.  But if they want to give it to their kids (upon their death), then the tax man demands an extra pound of flesh.  You can do the whole $14k-per-year thing, but it's not practical for large estates, and you also run the risk of depleting your assets too soon if you live too long.

Other than a blatant grab for cash, what's the purpose behind an inheritance tax?  What is the negative outcome that such a tax is preventing?

Really? What restaurants outside of Delaware have no sales tax? If i buy a Bentley there is sales tax, pkus registration and inspection tax.

Transfers of money are often taxed

[JrDoctor]

How do you combat this? My mom has suddenly (at least that her DD's knew of) turned into the worst example of US Conservative there is. Racist, prejudiced, intolerant, etc. If you don't discuss politics or current events, you'd never know.

I have no idea, sadly racism often goes with stupidity.  A few nights ago a patient started getting racist about the foreign doctors in A&E.  Of four of us I was the only 'English' doctor (ironically not born in England but white so that was good enough for the patient).  The racist ignoramus didn't realise there would be no A&E service without foreign doctors.

[Dicey]

How do you combat this? My mom has suddenly (at least that her DD's knew of) turned into the worst example of US Conservative there is. Racist, prejudiced, intolerant, etc. If you don't discuss politics or current events, you'd never know.

I have no idea, sadly racism often goes with stupidity.  A few nights ago a patient started getting racist about the foreign doctors in A&E.  Of four of us I was the only 'English' doctor (ironically not born in England but white so that was good enough for the patient).  The racist ignoramus didn't realise there would be no A&E service without foreign doctors.

Sadly, hate is taught and is based on fear. Hard as it seems to muster, a grain of empathy that the person in question was taught by bigots might help a tiny bit. In the case of dementia, once the rational mind has checked out, fear and paranoia often step in to fill the gap. Hateful, absolutely, but not always within the hater's control, strange as that sounds.

MIL has Alzheimer's. She hasn't seen her wildly dysfunctional daughter in four years, yet any time something goes missing, she says "SuzieQ took it when she was here the other day." Um, no. Once, we were sitting in the car, waiting for DH to return from a seperate errand. She was in the back seat. A man of color approached, on his way you his own car. She reached over and locked her door. Asshole. I constantly have to tell myself that she can't help it. Constantly. Did I mention constantly?

[TomTX]

You can do the whole $14k-per-year thing, but it's not practical for large estates, and you also run the risk of depleting your assets too soon if you live too long.

Anybody who is in federal estate tax territory is NOT going to deplete their assets by giving their kids/grandkids 14k/year.   As noted upthread, state taxes may be a different ballgame.

I don't see why this isn't practical.   Seems like an excellent way for those near the federal taxable thresholds to ensure they limit the taxes and maximize money going to the family.

Remember that it is $14k per person. A couple with 3 married kids could transfer $162k per year. Each unmarried grandkid, nephew and whatnot is another $28k per year

[Paul der Krake]

You can do the whole $14k-per-year thing, but it's not practical for large estates, and you also run the risk of depleting your assets too soon if you live too long.

Anybody who is in federal estate tax territory is NOT going to deplete their assets by giving their kids/grandkids 14k/year.   As noted upthread, state taxes may be a different ballgame.

I don't see why this isn't practical.   Seems like an excellent way for those near the federal taxable thresholds to ensure they limit the taxes and maximize money going to the family.

Remember that it is $14k per person. A couple with 3 married kids could transfer $162k per year. Each unmarried grandkid, nephew and whatnot is another $28k per year

Yup. And people who are well into the federal estate tax territory hopefully don't start their estate planning 6 months before croaking. Say you expect to die at 85 (the wealthy tend to live longer than most), at 70 you've already been retired a couple of years and know what your future looks like. You can start your "exit strategy" and give away millions over the next decade+, provided you have enough heirs and charitable recipients. You do this every January 1 by sitting down with your spouse and writing all your checks for the year in 30 minutes.

[Just Joe]

Could you cash those checks and just put it in the safe? I mean its your money - who is to say you don't like to spend alot? Then hand over the cash to the family later when you feel like it?

[secondcor521]

Could you cash those checks and just put it in the safe? I mean its your money - who is to say you don't like to spend alot? Then hand over the cash to the family later when you feel like it?

Sure, but cash on hand, if it's still "yours", is counted for the purposes of estate taxes.  I thought the discussion was about how to avoid estate taxes.  Unless you've completed the gift, it would still be included in your estate.

Also, if you accumulated several years' worth of giving in your safe, then when you did hand it over, you might run afoul of the $14K per person per year limit, which would either result in gift taxes or a reduction in your estate tax exemption later when you did pass away.

Or, if you did have a safe full of cash and didn't declare it, then you'd probably be committing federal felonious tax evasion and/or perjury if you later sign an income tax or estate tax return.

[Catbert]

Could you cash those checks and just put it in the safe? I mean its your money - who is to say you don't like to spend alot? Then hand over the cash to the family later when you feel like it?

Sure, but cash on hand, if it's still "yours", is counted for the purposes of estate taxes.  I thought the discussion was about how to avoid estate taxes.  Unless you've completed the gift, it would still be included in your estate.

Also, if you accumulated several years' worth of giving in your safe, then when you did hand it over, you might run afoul of the $14K per person per year limit, which would either result in gift taxes or a reduction in your estate tax exemption later when you did pass away.

Or, if you did have a safe full of cash and didn't declare it, then you'd probably be committing federal felonious tax evasion and/or perjury if you later sign an income tax or estate tax return.

On the plus side though, stacks of cash in a house after the owner dies are likely to generate more stories for this thread...

[zolotiyeruki]

Yeah, I don't quite understand it either.  If the wealthy person decides to spend the money on a yacht or a mansion or a Bentley or eating at fancy restaurants, there's no extra tax.  But if they want to give it to their kids (upon their death), then the tax man demands an extra pound of flesh.  You can do the whole $14k-per-year thing, but it's not practical for large estates, and you also run the risk of depleting your assets too soon if you live too long.

Other than a blatant grab for cash, what's the purpose behind an inheritance tax?  What is the negative outcome that such a tax is preventing?

Do you both agree that unrealized gains should continue to be taxed at 0% and stepped up in basis for the first $5 million? What about after that amount. Current taxes for the living maxes out at 20% for long term capital gains, but 39.6% for income. What are your positions as to why this is "fair"?  Max inheritance tax is 40%, very similar to the max income rates. Why should capital gains be taxed at a lower rate than income. To that end, why should my rental income be treated as regular income, but my dividends are not? Why shouldn't all income taxed the same?

Would you both agree that the cost basis should not be taxed at all since it has already been taxed, but any gains, unrealized or not, should eventually be taxed. That may be by the beneficiary when they eventually sell at the ORIGINAL cost basis with the profit taxed at their tax rate.

Why should anyone receive any gain without being taxed eventually, minus reasonable exclusions like primary residence home selling or the multi-millions in inheritance exclusion from taxes as examples?

If I take my income, after it is taxed, and hire someone to do work for me, they will also be taxed on THEIR income. That was originally simply MY already taxed income. I would argue this money should not be taxed well before inheritance money is excluded, they at least did something for it. Why should an inheritance get MORE favorable treatment than labor?

Interesting--I was unaware that the basis was reset on inheritance.  I think that either the basis should remain as-is OR the money gets taxed when transferred.  Or allow the inheritors to stick it in an IRA :D

Why do I oppose an inheritance tax?  I believe any burden a government places on citizens should be tied to some benefit the government provides in exchange, e.g. gas taxes that pay for road maintenance, income and sales taxes that fund the law enforcement,and a judicial system that ensure stability and predictability, social security taxes that pay retirees (even if I wish I could opt out of it, at least the taxes are directly related to a govt function).  Inheritance taxes aren't tied to a government function of any sort, other than what talltexan mentioned about ensuring the orderly transferring of the estate.

Really? What restaurants outside of Delaware have no sales tax? If i buy a Bentley there is sales tax, pkus registration and inspection tax.

Transfers of money are often taxed

To clarify, I said "extra" taxes. Whether Grandpa Moneybags spends the money on a yacht, or his kids spend it on Gucci purses, it'll get taxed at that point.

[Spork]

Interesting--I was unaware that the basis was reset on inheritance.  I think that either the basis should remain as-is OR the money gets taxed when transferred.  Or allow the inheritors to stick it in an IRA :D

If nothing else, resetting the basis makes sense from a record keeping standpoint.  Maybe this gets less important as brokers have become more computerized... but there will be holdovers for decades even with that.  The beneficiaries may not be able to find records of ownership.  Consider, for instance, the headache in determining the basis on a 100lb bucket of silver coins.  The best guess would be to set the basis at the "newest" coin.

edit: bad quotiness

[radram]

Interesting--I was unaware that the basis was reset on inheritance.  I think that either the basis should remain as-is OR the money gets taxed when transferred.  Or allow the inheritors to stick it in an IRA :D



If nothing else, resetting the basis makes sense from a record keeping standpoint.  Maybe this gets less important as brokers have become more computerized... but there will be holdovers for decades even with that.  The beneficiaries may not be able to find records of ownership.  Consider, for instance, the headache in determining the basis on a 100lb bucket of silver coins.  The best guess would be to set the basis at the "newest" coin.

I would prefer to tax yearly unrealized gains before accepting that lazy paperwork is a valid reason to allow millions of a persons inheritance  to be transfered to others at a rate of 0%.

How about if you have no paperwork, it is all taxed at the tax rate of the beneficiaries. I have a feeling excellent records would then be kept, don't you?

As a side note, I absolutely HATE the phrase "paying your fair share". I find the phrase absolutely worthless and not at all helpful. I get angry when I hear someone use it. How in the world could a billionaires "fair share" be millions or billions, while an unemployed persons is $0. They are living in the same country. To me, it is all about the fairness of the tax SYSTEM we choose, not in what the overall dollar value one ends up paying. I am sure most billionaires disagree with me.

[radram]

Why do I oppose an inheritance tax?  I believe any burden a government places on citizens should be tied to some benefit the government provides in exchange, e.g. gas taxes that pay for road maintenance, income and sales taxes that fund the law enforcement,and a judicial system that ensure stability and predictability, social security taxes that pay retirees (even if I wish I could opt out of it, at least the taxes are directly related to a govt function).  Inheritance taxes aren't tied to a government function of any sort, other than what talltexan mentioned about ensuring the orderly transferring of the estate.

Very interesting position. I could see this as some combination of your overall tax bill, superimposed over those popular charts that show where $1 is spent. I do like the idea of everyone seeing your total tax burden, and where exactly it goes. Maybe people would be a little more aggressive is demanding we pay down the debt. 6% of every dollar in 2013 was used to pay interest on debt.

It could lead to a more informed dialog, if that is really what we want. I am not so sure the people that make those decisions are in favor of a more informed populous.

[zolotiyeruki]

I would prefer to tax yearly unrealized gains before accepting that lazy paperwork is a valid reason to allow millions of a persons inheritance  to be transfered to others at a rate of 0%.

How about if you have no paperwork, it is all taxed at the tax rate of the beneficiaries. I have a feeling excellent records would then be kept, don't you?

As a side note, I absolutely HATE the phrase "paying your fair share". I find the phrase absolutely worthless and not at all helpful. I get angry when I hear someone use it. How in the world could a billionaires "fair share" be millions or billions, while an unemployed persons is $0. They are living in the same country. To me, it is all about the fairness of the tax SYSTEM we choose, not in what the overall dollar value one ends up paying. I am sure most billionaires disagree with me.

It *does* seem a bit odd that inheritors get a free Basis reset

When inheriting an IRA, beneficiaries can roll it into their own IRA, or take withdrawals over 5 years and pay income taxes at their marginal rate, if I understand it correctly, so that they don't have to pay the highest marginal rates.

As for the tax system, yeah, the "your fair share" argument really appeals to the less-educated, populist emotions.  It's a bit disingenuous to attack a billionaire for making use of all the legal tax-avoidance strategies available to him/her, while ignoring the system that makes it possible.  To be fair, politicians usually bring it up as an argument to reform the tax system in some way.

Very interesting position. I could see this as some combination of your overall tax bill, superimposed over those popular charts that show where $1 is spent. I do like the idea of everyone seeing your total tax burden, and where exactly it goes. Maybe people would be a little more aggressive is demanding we pay down the debt. 6% of every dollar in 2013 was used to pay interest on debt.

It could lead to a more informed dialog, if that is really what we want. I am not so sure the people that make those decisions are in favor of a more informed populous.

I'm guessing the general population already pays more than 6% of their income on interest as it is, so I'm not sure how effective that argument would be :)  But yeah, I wish government expenditures were better publicized.

Part of the complication of our government system is the fact that we have extra layers of taxation and spending.  For example, some people are bothered because the federal government spends 10x as much on the military as on education, but they forget that education is funded mostly on the state level.

[Candace]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

[Dicey]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

+1

[LPeters]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

As the OP— for whatever tiny authority that grants me— I agree. While interesting on their own, inheritance law and taxes belong in their own separate thread, please.

[radram]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

I'll own this. It looks like it was me that took the thread in a different direction. Quite honestly, it was a few posts before I realized this conversation was even in this thread. Sorry about that.

I will steer the conversation back to the original thread while still tying in to my runaway post.

I am the executor for my father. We differ politically, but we still have mutual respect for each others position. There is no way either of us will change each others mind. He has never really played by the rules, he believes they are for other people, not him. I am very much a play by the rules kind of person.

He would rather I remove worth from his estate than leave it in his estate to be taxed. I will not, and I keep telling him I will not. It is a crime, and his money is not worth going to jail for. I am not naive, I know it happens, a LOT. Even little things like "take the silverware so Aunt Ruth doesn't get it", or "remove the coin collection from the house when I die" kind of instructions happen all the time. I will not play that game. It does lead to some very interesting conversations, but fewer and fewer of them as time moves on. I guess not really true drama, but it sure could have been, with a potential prison story to boot.

[TheGrimSqueaker]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

I'll own this. It looks like it was me that took the thread in a different direction. Quite honestly, it was a few posts before I realized this conversation was even in this thread. Sorry about that.

I will steer the conversation back to the original thread while still tying in to my runaway post.

I am the executor for my father. We differ politically, but we still have mutual respect for each others position. There is no way either of us will change each others mind. He has never really played by the rules, he believes they are for other people, not him. I am very much a play by the rules kind of person.

He would rather I remove worth from his estate than leave it in his estate to be taxed. I will not, and I keep telling him I will not. It is a crime, and his money is not worth going to jail for. I am not naive, I know it happens, a LOT. Even little things like "take the silverware so Aunt Ruth doesn't get it", or "remove the coin collection from the house when I die" kind of instructions happen all the time. I will not play that game. It does lead to some very interesting conversations, but fewer and fewer of them as time moves on. I guess not really true drama, but it sure could have been, with a potential prison story to boot.

What he's proposing is not illegal. He's within his rights to dispose of what he owns before dying.

[radram]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

I'll own this. It looks like it was me that took the thread in a different direction. Quite honestly, it was a few posts before I realized this conversation was even in this thread. Sorry about that.

I will steer the conversation back to the original thread while still tying in to my runaway post.

I am the executor for my father. We differ politically, but we still have mutual respect for each others position. There is no way either of us will change each others mind. He has never really played by the rules, he believes they are for other people, not him. I am very much a play by the rules kind of person.

He would rather I remove worth from his estate than leave it in his estate to be taxed. I will not, and I keep telling him I will not. It is a crime, and his money is not worth going to jail for. I am not naive, I know it happens, a LOT. Even little things like "take the silverware so Aunt Ruth doesn't get it", or "remove the coin collection from the house when I die" kind of instructions happen all the time. I will not play that game. It does lead to some very interesting conversations, but fewer and fewer of them as time moves on. I guess not really true drama, but it sure could have been, with a potential prison story to boot.

What he's proposing is not illegal. He's within his rights to dispose of what he owns before dying.

Not before he dies. He wants me to remove items after his death, and not claim these items as belonging to the estate. I should have phrased that better.

[Spork]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

I'll own this. It looks like it was me that took the thread in a different direction. Quite honestly, it was a few posts before I realized this conversation was even in this thread. Sorry about that.

I will steer the conversation back to the original thread while still tying in to my runaway post.

I am the executor for my father. We differ politically, but we still have mutual respect for each others position. There is no way either of us will change each others mind. He has never really played by the rules, he believes they are for other people, not him. I am very much a play by the rules kind of person.

He would rather I remove worth from his estate than leave it in his estate to be taxed. I will not, and I keep telling him I will not. It is a crime, and his money is not worth going to jail for. I am not naive, I know it happens, a LOT. Even little things like "take the silverware so Aunt Ruth doesn't get it", or "remove the coin collection from the house when I die" kind of instructions happen all the time. I will not play that game. It does lead to some very interesting conversations, but fewer and fewer of them as time moves on. I guess not really true drama, but it sure could have been, with a potential prison story to boot.

What he's proposing is not illegal. He's within his rights to dispose of what he owns before dying.

Not before he dies. He wants me to remove items after his death, and not claim these items as belonging to the estate. I should have phrased that better.

Maybe not worth the cost of updating a will... but it really seems like it would be easier to just specify things like that.  My Mom's/Dad's wills had some line in it (paraphrasing and IANAL) "I reserve the right to attach a list of stuff and designate whom it should go to."  They never created the list... but it seems like they were thinking ahead on giving away the silver to someone other than Aunt Ruthie and giving the coin collection to little Bobby.

[radram]

Can we please get this thread back on the original subject? Could you start a new thread for the political and tax discussions?

Thanks.

I'll own this. It looks like it was me that took the thread in a different direction. Quite honestly, it was a few posts before I realized this conversation was even in this thread. Sorry about that.

I will steer the conversation back to the original thread while still tying in to my runaway post.

I am the executor for my father. We differ politically, but we still have mutual respect for each others position. There is no way either of us will change each others mind. He has never really played by the rules, he believes they are for other people, not him. I am very much a play by the rules kind of person.

He would rather I remove worth from his estate than leave it in his estate to be taxed. I will not, and I keep telling him I will not. It is a crime, and his money is not worth going to jail for. I am not naive, I know it happens, a LOT. Even little things like "take the silverware so Aunt Ruth doesn't get it", or "remove the coin collection from the house when I die" kind of instructions happen all the time. I will not play that game. It does lead to some very interesting conversations, but fewer and fewer of them as time moves on. I guess not really true drama, but it sure could have been, with a potential prison story to boot.

What he's proposing is not illegal. He's within his rights to dispose of what he owns before dying.

Not before he dies. He wants me to remove items after his death, and not claim these items as belonging to the estate. I should have phrased that better.

Maybe not worth the cost of updating a will... but it really seems like it would be easier to just specify things like that.  My Mom's/Dad's wills had some line in it (paraphrasing and IANAL) "I reserve the right to attach a list of stuff and designate whom it should go to."  They never created the list... but it seems like they were thinking ahead on giving away the silver to someone other than Aunt Ruthie and giving the coin collection to little Bobby.

I am really explaining this poorly. He was requesting that I embezzle funds from his estate in order to keep the value of his estate below taxable amounts. If I give Bobby the $12,000,000 coin collection like he wants, but do not claim that as belonging to the estate, that is a crime the executor is committing, and I would be risking prison time just to give away stuff. The value of the collection in this example is simply for emphasis.

[zolotiyeruki]

I am really explaining this poorly. He was requesting that I embezzle funds from his estate in order to keep the value of his estate below taxable amounts. If I give Bobby the $12,000,000 coin collection like he wants, but do not claim that as belonging to the estate, that is a crime the executor is committing, and I would be risking prison time just to give away stuff. The value of the collection in this example is simply for emphasis.

Aren't there ways around this, like a trust of some sort?  I'm not an estate lawyer, just curious.

[coin]

I am really explaining this poorly. He was requesting that I embezzle funds from his estate in order to keep the value of his estate below taxable amounts. If I give Bobby the $12,000,000 coin collection like he wants, but do not claim that as belonging to the estate, that is a crime the executor is committing, and I would be risking prison time just to give away stuff. The value of the collection in this example is simply for emphasis.

Aren't there ways around this, like a trust of some sort?  I'm not an estate lawyer, just curious.

I imagine he could give it away before he dies - that would sidestep the issue neatly.

[firelight]

I am really explaining this poorly. He was requesting that I embezzle funds from his estate in order to keep the value of his estate below taxable amounts. If I give Bobby the $12,000,000 coin collection like he wants, but do not claim that as belonging to the estate, that is a crime the executor is committing, and I would be risking prison time just to give away stuff. The value of the collection in this example is simply for emphasis.

Aren't there ways around this, like a trust of some sort?  I'm not an estate lawyer, just curious.

I imagine he could give it away before he dies - that would sidestep the issue neatly.

If he were to give it away, it would still be subject to the $14k per year per person limit right?

[SwordGuy]

How would you respond to the following document found in your dad's desk:

A to-do list that says, "Remember to return the coin collection I gave to Bobby."

[Just Joe]

I am really explaining this poorly. He was requesting that I embezzle funds from his estate in order to keep the value of his estate below taxable amounts. If I give Bobby the $12,000,000 coin collection like he wants, but do not claim that as belonging to the estate, that is a crime the executor is committing, and I would be risking prison time just to give away stuff. The value of the collection in this example is simply for emphasis.

Aren't there ways around this, like a trust of some sort?  I'm not an estate lawyer, just curious.

I imagine he could give it away before he dies - that would sidestep the issue neatly.

If he were to give it away, it would still be subject to the $14k per year per person limit right?

Who would friggin' know unless it was referenced on insurance documents and there was a big investigation? I'm not feeling the urge to tell the gov't every last detail about my things. Of course this urge isn't important b/c I don't have anything of value to worry about. ;)

I can only imagine that in the well-moneyed families that things are quietly moved from generation to generation all the time.

[With This Herring]

I am really explaining this poorly. He was requesting that I embezzle funds from his estate in order to keep the value of his estate below taxable amounts. If I give Bobby the $12,000,000 coin collection like he wants, but do not claim that as belonging to the estate, that is a crime the executor is committing, and I would be risking prison time just to give away stuff. The value of the collection in this example is simply for emphasis.

Aren't there ways around this, like a trust of some sort?  I'm not an estate lawyer, just curious.

I imagine he could give it away before he dies - that would sidestep the issue neatly.

If he were to give it away, it would still be subject to the $14k per year per person limit right?

Who would friggin' know unless it was referenced on insurance documents and there was a big investigation? I'm not feeling the urge to tell the gov't every last detail about my things. Of course this urge isn't important b/c I don't have anything of value to worry about. ;)

I can only imagine that in the well-moneyed families that things are quietly moved from generation to generation all the time.

Let's not promote tax fraud, please.

[Tabaxus]

I am really explaining this poorly. He was requesting that I embezzle funds from his estate in order to keep the value of his estate below taxable amounts. If I give Bobby the $12,000,000 coin collection like he wants, but do not claim that as belonging to the estate, that is a crime the executor is committing, and I would be risking prison time just to give away stuff. The value of the collection in this example is simply for emphasis.

Aren't there ways around this, like a trust of some sort?  I'm not an estate lawyer, just curious.

I imagine he could give it away before he dies - that would sidestep the issue neatly.

If he were to give it away, it would still be subject to the $14k per year per person limit right?

Who would friggin' know unless it was referenced on insurance documents and there was a big investigation? I'm not feeling the urge to tell the gov't every last detail about my things. Of course this urge isn't important b/c I don't have anything of value to worry about. ;)

I can only imagine that in the well-moneyed families that things are quietly moved from generation to generation all the time.

And every time it's done, everyone involved is committing a crime.  So, yeah.

[radram]

How would you respond to the following document found in your dad's desk:

A to-do list that says, "Remember to return the coin collection I gave to Bobby."

I would do whatever the estate attorney and accountant say to do with it. I would think in this particular example, they would advise to list it as an asset in the estate, and do with it whatever the will/ trust instructions say to do. No way a piece of paper in a drawer would super seed these documents.

[talltexan]

The coin collection would be problematic if it were being insured as a rider to the deceased's home owner's policy. Now it's documented, even has an assessed value, and ought to be taxed (subject to the exemption, of course).

Or, you could put that collection within a trust.

[radram]

The coin collection would be problematic if it were being insured as a rider to the deceased's home owner's policy. Now it's documented, even has an assessed value, and ought to be taxed (subject to the exemption, of course).

Or, you could put that collection within a trust.

Why would documentation be a problem? Everything owned by a person should be taxed upon death, subject to the exemption, under current rules. That is why my I posted my story to begin with.


The collection placed within a trust makes good sense. Defined beneficiary policy, and of course the trust would be subject to taxation above the exemption amount.

After AGAIN hijacking this thread inadvertently, I will now ask that this thread be put back on topic. I apologize again.

Stories anyone? PLEASE?

[Sydneystache]

Happy to oblige @Radram 🙂

I like this thread because inheritances bring the best and worst out of functional and dysfunctional families.

The good: my mum's side, her parents bought 3 different lots for 3 children so each child would equally share in property; close friends: they've bought land over 2 lots for their 2 kids.

Lesson: I'm seeing a pattern here.

The bad: my mum's relationship with my dad made her confide in me she's only leaving $5,000 to him which is a big FU for the hell he's put her through. The probs: he will contest it once he realises the paltry amount.

Lesson: Mum, please don't die before dad; be FI so don't have to deal with the consequential shit.

[talltexan]

While I like Sydney's plan of buying 1 lot for each child, it sure seems like a "sticky" way to save portions of the estate for your descendants. What if a child wants to move? What if they redistrict one of the lots so that the school quality causes the value to change drastically?

[Sydneystache]

Easy solution I would have thought - descendant sells the lot they inherit, and moves on; or descendant sells it to another relative at first instance, and moves on. Us first cousins will have to deal with that when all the parents die.

[SweetLife]

Whatever you do don't give a lot to two people 50/50 ... that is what I am going through right now.
1 acre owned with my brother (whom I adore) ... But this is creating a huge issue for me ... My brother wants to give me $20,000 for it ... and he will pay the tax on it. However there are no building lots available in our area right now and the housing prices are through the roof so I have been counselled to get an appraisal on the land before I sell it. On one hand I don't want to alienate my brother on the other if the land is actually worth $70000 - or more (rather than the $60000) it was appraised for when my Mom passed away it would make a pretty large difference to our bank account. There is more to the story but this is the simplified version.

Try and make your wills "clean" not messy for whomever is inheriting.


I'm not sure what Mom was thinking when she did this 50/50 split but it is just a big headache.

[talltexan]

Not everything your parents plan to leave behind is valuable: https://www.forbes.com/sites/nextavenue/2017/02/12/sorry-nobody-wants-your-parents-stuff/#7072571724ed

[Spiffy]

Whatever you do don't give a lot to two people 50/50 ... that is what I am going through right now....
I'm not sure what Mom was thinking when she did this 50/50 split but it is just a big headache.

Yes, this! I think land is the most difficult thing to deal with as an inheritance. We will be dealing with this soonish (my beloved grandmother is a healthy 93). Almost all of her wealth is in farming and ranching land. So around 2000 acres will be split between my mom and her 2 siblings and the children of her deceased brother. Grandmother has not farmed the land herself since my grandfather died. I has been leased out for years. My grandmother has done her best to divide the land equally, not in acreage, but in worth. So that means some parts being leased by one farmer will be owned by two people. It is going to be a nightmare to figure out the money involved with this because the owner pays for land taxes, crop insurance and fertilizer, etc. while the farmer pays the lease and seeds, then gives a portion of the crops back to the owner, etc. It's all very feudal. I think it would be so much easier to just sell the land! No one is going to want to farm it themselves, or even knows how to anymore.
edited to add: one of Mom's siblings and children of deceased brother have already built houses on some of the land they will inherit and others use some for hunting and fishing, but Grandmother still pays the taxes. So this could also be posted under the unequal inheritance thread, if we get technical about it!

[Spork]

Not everything your parents plan to leave behind is valuable: https://www.forbes.com/sites/nextavenue/2017/02/12/sorry-nobody-wants-your-parents-stuff/#7072571724ed

This article is pretty spot on to what we recently experienced.  Even "expensive stuff" that my parents carried insurance riders on for years were just not worth much -- unless you were willing to drop them at a consignment dealer and wait months for the right buyer.

[tyrannostache]

Not everything your parents plan to leave behind is valuable: https://www.forbes.com/sites/nextavenue/2017/02/12/sorry-nobody-wants-your-parents-stuff/#7072571724ed

This article is pretty spot on to what we recently experienced.  Even "expensive stuff" that my parents carried insurance riders on for years were just not worth much -- unless you were willing to drop them at a consignment dealer and wait months for the right buyer.

Ugh, indeed. I've tried to point this out to my parents, and it didn't seem to sink in. They recently downsized into a retirement community, and my dad has 2 storage lockers filled with furniture and "stuff" from the old house that he is holding on to because he thinks the kids might want that stuff someday. And yet he and my mom are still buying new furniture and oriental rugs with the idea that they will be "family heirlooms." Also because a high-pressure rug salesman came to their house and convinced them that it was a really good idea.

Pops also just commissioned for himself a huge custom-made $4k+ desk, and he messaged both my sibling and I to find out what our preferences would be for the finish, since it will clearly be residing in one of our homes one day. I had to repeat, once again, that we don't want his furniture (except that one comfy chair. I love that comfy chair).

My parents have always been the antithesis of mustachianism, saved only by virtue of having a high income. (I just found out that for the last several years, they were paying nearly $1000 per MONTH for lawn care service. For a guy to mow every other week, rake leaves in the fall, trim bushes, etc on a 1/2-acre lot.)

[mtn]

My parents, and I as well, love to go to estate sales.

Go to any estate sale on the last day. Stuff is usually 50% off. Look at how much is still there, being sold for pennies on the dollar. Even nice stuff.

My wife and I just got 2 recliners, very good condition, for $500 total. Cost of them new? Over $2,000 EACH. My wife buys kitchen stuff like its going out of style at these things.

My parents, even though they still buy a lot at these things, are also getting rid of stuff quickly. They've basically told us (my brothers and I) that if we want something, tell them, otherwise it is liable to disappear.

[Villanelle]

My dad and his two siblings inherited 3 pieces of property.  While there were 3 siblings and three properties, they were of wildly varied value, so it wasn't an "each take one" situation.  Thankfully, it worked out fine.  Two were sold, and my dad took one--the one grandma lived in until she died-- as his share (and paid money to the siblings by way of taking a smaller portion of the rest of the estate, since the one he took was the most expensive by far).  My husband and I, newlyweds at the time, then purchased the house from him.

He/we paid a fair price--the appraised, fair market value minus what they would have had to pay a realtor.  Everyone was fair and reasonable about it, no one quibbled over a few thousand here or there.  (Could they have sold that home for $3000 more, or would it have actually gotten $4000 less?) 

In their case, leaving property worked just fine.  I guess the issue is when it's super complicated (like the farm division above, with unclear boundaries), or when one person wants to keep and one wants to sell (and the estate doesn't have enough money to settle the difference, or the parties involved can't be reasonable).

There's a chance DH and I would actually want my parents' current home by the time we inherit, which is hopefully way in the future.  I'd fully expect to pay my sister for her fair share of the value.  I also fully anticipate both of us being reasonable about what that value is.  (Perhaps I'm setting myself up for disappointment there. :lol) Thankfully, we are both reasonable people, and we are financially secure enough (and likely will be even more so by the time we are inheriting) that a few thousand dollars won't make any difference, so we will be able to afford to be magnanimous with sale prices and estimate commission.  I'd never expect for her to give me the property obscenely cheaply, and nor would I think she'd try to get more out of the deal than she would with her half of the proceeds of a traditional sale. 

As with so many of these things, I think family dynamics is important when considering what will work.  I would have for my parents to sell off things they want or think are important to try to prevent drama between my sister and I down the road. 

[SwordGuy]

I own 1/2 of one farm and 1/3 of another farm.  My uncle owns 1/2 and 1/3 and my aunt owns 1/3.   (It's all fair and square as to the difference, my aunt chose not to participate in a partnership on the 2nd farm.)

My uncle handles dealing with the farmers and he mails my share of the profits as they come in.
He's taught his son and grandson what they need to know so they can pick up when he can't do it any more.  (He's in his 90s.)

There's no need to sell the land.   It reliably sheds off $20k per year as my share.   If the farm was a stock portfolio my share of that portfolio would be worth $500k according to the 4% rule.    I don't believe we could sell both farms for that much cash based on its current land value.  Certainly couldn't get enough cash to give each person a stock portfolio big enough to get the same returns on a 4% rule.

Thankfully, neither my aunt nor my uncle are motivated to sell.   There are 6 cousins (3 each) that might inherit from each of them.   4 of them are completely reasonable and are unlikely to try to force a sale.   The other 2?  Who knows.   Hopefully we can buy them out at a fair price if they just want quick cash and won't settle for long term income.

So, I guess what I'm saying is that it can work out just great if you're dealing with fair-minded, reasonable people who love one another as opposed to selfish, greedy, foolish, they-are-the-center-of-the-universe kind of people.

[Sydneystache]

There are 6 cousins (3 each) that might inherit from each of them.   4 of them are completely reasonable and are unlikely to try to force a sale.   The other 2?  Who knows.   Hopefully we can buy them out at a fair price if they just want quick cash and won't settle for long term income.

That's something I am thinking about say 10, 20 years down the track. There are 4 of us first cousins, then there are 3 second cousins so far. Before my beloved grandma died, she was worried about the future of her estate because she thought her kids were disinterested. The thing is the legacy can be bit of a burden (but also how one frames it) so I concur with the comments about the 'stickiness' of inheritances. Ideally, I don't want my mother's lot sold because it is my link to my grandma, however, if it becomes too much of a burden, then I'd prefer to see it go rather than the family torn apart. The estate is our link to each other and will become even more so when it goes down to the second cousins. It's the "emotional ownership" part that will be our Achilles' heels.

However, I think us first cousins are pretty all financially independent of the estate so we don't need it. Out of us 4, it will be a toss up between me and my older cousin as to who will be buying the others out so it is going to be a matter of maintenance and being an absentee landlord if it comes to that.

For my own situtation, I've ensured my son will inherit landed assets independent of the estate so he won't feel he has to fight his second cousins - if it ever eventuates - for his share. He doesn't need this particular inheritance.

[talltexan]

reviewing these stories, I'm really seeing the argument for taking out enough life insurance that you can provide liquidity to siblings/heirs for buying out each others' stakes in a real estate-type property.

[Spiffy]

My uncle handles dealing with the farmers and he mails my share of the profits as they come in.
He's taught his son and grandson what they need to know so they can pick up when he can't do it any more.  (He's in his 90s.)

So, I guess what I'm saying is that it can work out just great if you're dealing with fair-minded, reasonable people who love one another as opposed to selfish, greedy, foolish, they-are-the-center-of-the-universe kind of people.

Yes, thankfully my family is reasonable and loving and I don't think it will cause relationship problems and my Mom is trying to learn everything she can now to run the farm smoothly. She grew up on that farm and now has a small hobby farm with my dad, but once she can't do it anymore, I wonder who will. I like cows. I guess I better get busy learning! But my oldest brother is already retired, maybe he will do it. Second brother doesn't live close, but has no kids. Maybe he can manage it. See, once it gets to the third generation it gets more complicated.

[Spork]

My parents, and I as well, love to go to estate sales.

Go to any estate sale on the last day. Stuff is usually 50% off. Look at how much is still there, being sold for pennies on the dollar. Even nice stuff.

My wife and I just got 2 recliners, very good condition, for $500 total. Cost of them new? Over $2,000 EACH. My wife buys kitchen stuff like its going out of style at these things.

My parents, even though they still buy a lot at these things, are also getting rid of stuff quickly. They've basically told us (my brothers and I) that if we want something, tell them, otherwise it is liable to disappear.

And at the end of the estate sale, Salvation Army (or the charity of your choice) will show up and take everything for nothing on the dollar.  My parents' house was a truckload.