Author Topic: Inheritance Drama: You Got Any? Stories Wanted.  (Read 1171231 times)

Wolfpack Mustachian

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2900 on: February 23, 2022, 01:36:10 PM »
Yeah, he knows what he is going to do with the money, but for now mum is the word. He doesn't want to interact with DotLWaT at all . . . he felt this way when I met him, but for many years I encouraged him to play nice (bc she's family, etc.) At this point, even my kind heart has given up on that relationship.

Once the estate is completely settled, with the house sold and probate all completed, then he'll send checks to the deceased's grandsons. It's a decent chunk of money, so it will help them with college or whatever they need to start their adult lives, but for us it is an irrelevant amount in the grand scheme of things.

Zamboni, I'm sorry, but that one sentence makes me curse you. I HATE it when an outsider comes into the family and assumes that everyone should play by their rules without considering that maybe, just maybe, there's a damn good reason why certain dynamics exist. Who are you, or anyone, to dictate that someone interact with anyone "because family". In this case it sounds like it wasn't as bad as it could be - but that isn't always the case.

Hmm, I know it’s all relative (hah!), but I wouldn’t equate “encourage” with “dictate”. I think it’s quite normal for a couple to discuss these kinds of things and look to each other for advice and thoughts. Interactions with the wider family affect both partners in a couple, so it only makes sense to decide such things as a unit. That doesn’t mean one person is dictating anything.

I didn't get that vibe either. There's absolutely nothing I don't want my SO to comment on. I value her opinion over anyone else's. She doesn't tell me what I have to do... never has,  but she encourages me a lot and is very often spot on.

Zamboni

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2901 on: February 23, 2022, 03:15:25 PM »
Yeah, he knows what he is going to do with the money, but for now mum is the word. He doesn't want to interact with DotLWaT at all . . . he felt this way when I met him, but for many years I encouraged him to play nice (bc she's family, etc.) At this point, even my kind heart has given up on that relationship.

Once the estate is completely settled, with the house sold and probate all completed, then he'll send checks to the deceased's grandsons. It's a decent chunk of money, so it will help them with college or whatever they need to start their adult lives, but for us it is an irrelevant amount in the grand scheme of things.

Zamboni, I'm sorry, but that one sentence makes me curse you. I HATE it when an outsider comes into the family and assumes that everyone should play by their rules without considering that maybe, just maybe, there's a damn good reason why certain dynamics exist. Who are you, or anyone, to dictate that someone interact with anyone "because family". In this case it sounds like it wasn't as bad as it could be - but that isn't always the case.

It's okay, Sibley. I do understand "just no" as a concept. There is at least one person I will never play nice with . . . ever . . . so I get it.

When someone in his family would do something nasty or send some really cruel text and he'd want to respond similarly, and I would just point out that it isn't really productive . . . learning not to take the bait is a skill. Taking the high road when you can. That is playing nice to me.

I never dictated anything or made any rules. He'd say "I got invited to this family thing, ugh, I don't want to go." and I'd say "well, you don't have to go, but I can go with you if you think that will provide a buffer." Then he'd decide for himself, and pretty much without fail he'd be happy he went for one reason or another. I certainly never made him go to anything or call anyone or anything like that. There are often some people at family events he DOES want to see, like cousins he really likes and their kids. I don't think he has ever regretted that we went together to something. He definitely regretted some of the things he chose to attend alone, but that was never my idea. For awhile the family members known to be horrible to him were on their best behavior when I was around, I guess. But that has definitely worn off, so finally I have seen their true colors, and I am no longer an effective buffer as they just see me as an extension of him now.

I had friends growing up who had parents who refused to go to their own child's wedding because they refused to see their ex and that hate was ultimately more important to them than anything. Unless that person beat you or truly abused you, then it makes sense to me to swallow your irritation and petty squabbles with your ex in support of your child. That's the kind of thing I'm talking about. Easier said than done, I know.

Sibley

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2902 on: February 23, 2022, 09:15:50 PM »
Zamboni, that's good. You're in the clear. Clearly, bit of a button for me, and my extended family isn't even bad!

As for everyone else - great you don't see an issue, but be careful. Because you don't know what happens behind closed doors and plenty of abusers are fully capable of putting on a nice face.

trashtalk

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Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2903 on: February 23, 2022, 09:23:42 PM »
Zamboni, that's good. You're in the clear. Clearly, bit of a button for me, and my extended family isn't even bad!

As for everyone else - great you don't see an issue, but be careful. Because you don't know what happens behind closed doors and plenty of abusers are fully capable of putting on a nice face.
I hear you. When I first met DH he was semi-estranged from his parents and I thought it was just a consequence of youthful immaturity opposite emotionally unintelligence boomers. I know better now. It was just that within my experience *at the time* I couldn’t conceive of parents being as malignant or truly disturbed. It’s been a learning journey for us separately and together as a couple.

Uh…inheritance drama? None yet but this thread has convinced me we should hire a probate attorney to help us monitor the inevitable future shenanigans with the settlement of the in-laws estate.
« Last Edit: February 23, 2022, 09:28:17 PM by trashtalk »


iluvzbeach

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2905 on: March 17, 2022, 07:21:18 PM »
Funny thing about that article is the poster is under the impression there will be assets to inherit. The joke could be on them if mom dies and has no assets to speak of, yet the child is left to clear out the house, close out finances, etc.

SwordGuy

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2906 on: March 17, 2022, 08:46:57 PM »
Funny thing about that article is the poster is under the impression there will be assets to inherit. The joke could be on them if mom dies and has no assets to speak of, yet the child is left to clear out the house, close out finances, etc.

You don't have to be the executor.  You can hire someone else to do the work or even just walk away and forget about it.


iluvzbeach

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2907 on: March 17, 2022, 09:13:36 PM »
Yes, absolutely. However, if there are no assets to speak of, it sure wouldn’t be fun to pay out of pocket for someone else to do it for a parent you haven’t communicated with in 20 years. I guess at that point the person could just leave it to others to handle if they didn’t want to deal with it. 

SwordGuy

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2908 on: March 17, 2022, 09:34:31 PM »
Yes, absolutely. However, if there are no assets to speak of, it sure wouldn’t be fun to pay out of pocket for someone else to do it for a parent you haven’t communicated with in 20 years. I guess at that point the person could just leave it to others to handle if they didn’t want to deal with it.

I don't think you understood.

You can just plain walk away and have nothing to do with it.  Period.

Refuse to receive any assets you don't want.   Or, since there's none worth taking none at all.   Refuse to deal with it.  Period.

What happens then?  Not your circus, not your monkeys.

As a kindness to whomever lives nearby, you could check with a lawyer to quit-claim any and all rights to the property to the local city or county or charity, making sure that doesn't open you up to any taxes, fines, etc.   Or just let the place fall apart until the city or county condemns it.


iluvzbeach

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2909 on: March 17, 2022, 09:55:20 PM »
I understood perfectly and even mentioned the person could just walk away and leave it to others. We’re on the same page.

SwordGuy

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2910 on: March 17, 2022, 10:20:59 PM »
I understood perfectly and even mentioned the person could just walk away and leave it to others. We’re on the same page.
You're absolutely right.  I misread.

TheGrimSqueaker

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2911 on: March 24, 2022, 10:56:53 AM »
Quote
DotLWaT

My sick, demented mind pronounced this as "Dotty La Twat".

I think that, after five years of having my brains licked out through my nose by the Venomous Spaz Beast, I've finally gotten eccentric enough for other people to notice.

iluvzbeach

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2912 on: March 24, 2022, 08:37:17 PM »
TGS, I may have snorted as I laughed after reading your comment. Hilarious!

Zamboni

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2913 on: March 25, 2022, 03:14:14 PM »
Awesome. I'm going to start referring to her as Dotty La Twat in my thoughts.

The Moneyist is a treasure trove of drama and bizarre or sad situations.

Capsu78

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Taran Wanderer

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2915 on: April 01, 2022, 09:06:49 PM »
I saw that. It’s ridiculous. They all got $10,000 (or whatever) back when. Why does it matter what it’s worth today?

NorCal

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2916 on: April 03, 2022, 10:37:08 AM »
https://www.msn.com/en-us/money/personalfinance/we-re-headed-for-a-family-feud-my-father-offered-his-3-kids-equal-monetary-gifts-my-siblings-took-cash-i-took-stock-it-s-soared-in-value-now-they-re-crying-foul/ar-AAVHck1?ocid=msedgntp&cvid=849b5047f55e46ab956323ad5c89eaf9

An entitlement "Do Over" request.   Not only would I not budge, but I would openly laugh at my brothers who whined about this.

Good grief, I can't stand that attitude.  Those who don't invest somehow think of investment gains like lottery money instead of capital-at-risk.

I'm dealing with a sorta-similar attitude in my family, although it's not an inheritance issue yet.

My FIL turned out to have zero retirement plans other than working until he died.  After his wife passed, we helped him buy a house near us where he could live semi-comfortably between social security and rolling his former home's equity into an annuity.  We covered the $60K down payment on his new house with the deal that he covered the mortgage payments, but the house and the loan are in our name.  He's effectively renting from us at cost (which is well below market rates).  This has actually worked out quite well, as he can live close by, and he has a level of financial stability he didn't have before.  He also gets to spend time with the grandkids, and we have a built-in babysitter on occasion.

Enter SIL.  We just heard that SIL is insanely jealous that she doesn't get to share in the equity gains from this house when he eventually passes.  While I could care less what SIL thinks, she does have a way of creating drama with everything she touches.  I'm sure we'll be hearing about this for years to come.

SwordGuy

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2917 on: April 03, 2022, 01:15:10 PM »

My FIL turned out to have zero retirement plans other than working until he died.  After his wife passed, we helped him buy a house near us where he could live semi-comfortably between social security and rolling his former home's equity into an annuity.  We covered the $60K down payment on his new house with the deal that he covered the mortgage payments, but the house and the loan are in our name.  He's effectively renting from us at cost (which is well below market rates).  This has actually worked out quite well, as he can live close by, and he has a level of financial stability he didn't have before.  He also gets to spend time with the grandkids, and we have a built-in babysitter on occasion.

Enter SIL.  We just heard that SIL is insanely jealous that she doesn't get to share in the equity gains from this house when he eventually passes.  While I could care less what SIL thinks, she does have a way of creating drama with everything she touches.  I'm sure we'll be hearing about this for years to come.

Wow.   I would suggest you tell her to cough up her own cash for a down payment, buy a different house for your dad and convince him to move into it.  She can undertake the all the risk to that money if your dad doesn't keep the house up or the market is way down when it comes time to sell or rent the house.  You'll then gladly sell the house you bought with your own money or rent it to strangers for way more cash per month.   Otherwise, STFU.

Jeesh, but I just have zero patience with people like this.

Villanelle

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2918 on: April 03, 2022, 01:29:38 PM »
https://www.msn.com/en-us/money/personalfinance/we-re-headed-for-a-family-feud-my-father-offered-his-3-kids-equal-monetary-gifts-my-siblings-took-cash-i-took-stock-it-s-soared-in-value-now-they-re-crying-foul/ar-AAVHck1?ocid=msedgntp&cvid=849b5047f55e46ab956323ad5c89eaf9

An entitlement "Do Over" request.   Not only would I not budge, but I would openly laugh at my brothers who whined about this.

Good grief, I can't stand that attitude.  Those who don't invest somehow think of investment gains like lottery money instead of capital-at-risk.

I'm dealing with a sorta-similar attitude in my family, although it's not an inheritance issue yet.

My FIL turned out to have zero retirement plans other than working until he died.  After his wife passed, we helped him buy a house near us where he could live semi-comfortably between social security and rolling his former home's equity into an annuity.  We covered the $60K down payment on his new house with the deal that he covered the mortgage payments, but the house and the loan are in our name.  He's effectively renting from us at cost (which is well below market rates).  This has actually worked out quite well, as he can live close by, and he has a level of financial stability he didn't have before.  He also gets to spend time with the grandkids, and we have a built-in babysitter on occasion.

Enter SIL.  We just heard that SIL is insanely jealous that she doesn't get to share in the equity gains from this house when he eventually passes.  While I could care less what SIL thinks, she does have a way of creating drama with everything she touches.  I'm sure we'll be hearing about this for years to come.

It might pay to spend the money for a couple hours with a lawyer, drawing up a contact that clearly shows he is a tenant and they he is in no way a part owner in the property or any equity.  That will make it much more difficult for SIL to try to challenge things when he passes away.  Or just have him sign an annual lease, with the rent listed as a specific dollar amount, that happens to coincide with the mortgage payment.  You can likely find a basic lease online for free or very cheap. 

Dicey

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2919 on: April 03, 2022, 04:23:47 PM »
I've also heard the IRS does not like when people rent to family members for below-market rates. When you take @Villanelle's excellent advice, be sure to run that past the professional, too.

former player

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2920 on: April 03, 2022, 04:50:09 PM »
I've also heard the IRS does not like when people rent to family members for below-market rates. When you take @Villanelle's excellent advice, be sure to run that past the professional, too.
Wouldn't it count as a gift, though?  As long as it's below the limits for a gift?

Zamboni

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2921 on: April 03, 2022, 05:41:23 PM »
The IRS's stance doesn't make any sense . . . they own the property, and can rent it for any amount that they see fit. Or, they can own property and choose to let it sit empty, as many people do. The only way I see the IRS have any complaint is if they are trying to write off an annual loss on the property that they are intentionally renting below market value. I'm not an accountant, though, so what do I know?

NorCal

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2922 on: April 03, 2022, 09:10:28 PM »
The IRS's stance doesn't make any sense . . . they own the property, and can rent it for any amount that they see fit. Or, they can own property and choose to let it sit empty, as many people do. The only way I see the IRS have any complaint is if they are trying to write off an annual loss on the property that they are intentionally renting below market value. I'm not an accountant, though, so what do I know?

So we do have a rental contract. Both my wife and FIL are attorneys, so documenting everything was pretty natural to them.

I ran this by a tax professional as well. Essentially, they told us that we shouldn’t treat it as a rental property for tax purposes.  Although they didn’t explicitly frame it this way, I believe the gap between fair-market rent and BMR rent is too small to get into taxable gift territory, and IRS rules explicitly forbid deducting expenses when BMR rent is involved.  The IRS doesn’t want people deducting business losses on things that aren’t actually a business.

NorCal

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2923 on: April 03, 2022, 09:16:35 PM »

My FIL turned out to have zero retirement plans other than working until he died.  After his wife passed, we helped him buy a house near us where he could live semi-comfortably between social security and rolling his former home's equity into an annuity.  We covered the $60K down payment on his new house with the deal that he covered the mortgage payments, but the house and the loan are in our name.  He's effectively renting from us at cost (which is well below market rates).  This has actually worked out quite well, as he can live close by, and he has a level of financial stability he didn't have before.  He also gets to spend time with the grandkids, and we have a built-in babysitter on occasion.

Enter SIL.  We just heard that SIL is insanely jealous that she doesn't get to share in the equity gains from this house when he eventually passes.  While I could care less what SIL thinks, she does have a way of creating drama with everything she touches.  I'm sure we'll be hearing about this for years to come.

Wow.   I would suggest you tell her to cough up her own cash for a down payment, buy a different house for your dad and convince him to move into it.  She can undertake the all the risk to that money if your dad doesn't keep the house up or the market is way down when it comes time to sell or rent the house.  You'll then gladly sell the house you bought with your own money or rent it to strangers for way more cash per month.   Otherwise, STFU.

Jeesh, but I just have zero patience with people like this.

Even better, we had asked SIL to contribute to the house or moving expenses when he was moving. She refused at the time, as she claimed to not have the money at the time.

With the benefit of hindsight, I am incredibly grateful she said no, as I’d hate to be in any type of business relationship with her.

SwordGuy

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2924 on: April 03, 2022, 10:07:11 PM »

My FIL turned out to have zero retirement plans other than working until he died.  After his wife passed, we helped him buy a house near us where he could live semi-comfortably between social security and rolling his former home's equity into an annuity.  We covered the $60K down payment on his new house with the deal that he covered the mortgage payments, but the house and the loan are in our name.  He's effectively renting from us at cost (which is well below market rates).  This has actually worked out quite well, as he can live close by, and he has a level of financial stability he didn't have before.  He also gets to spend time with the grandkids, and we have a built-in babysitter on occasion.

Enter SIL.  We just heard that SIL is insanely jealous that she doesn't get to share in the equity gains from this house when he eventually passes.  While I could care less what SIL thinks, she does have a way of creating drama with everything she touches.  I'm sure we'll be hearing about this for years to come.

Wow.   I would suggest you tell her to cough up her own cash for a down payment, buy a different house for your dad and convince him to move into it.  She can undertake the all the risk to that money if your dad doesn't keep the house up or the market is way down when it comes time to sell or rent the house.  You'll then gladly sell the house you bought with your own money or rent it to strangers for way more cash per month.   Otherwise, STFU.

Jeesh, but I just have zero patience with people like this.

Even better, we had asked SIL to contribute to the house or moving expenses when he was moving. She refused at the time, as she claimed to not have the money at the time.

With the benefit of hindsight, I am incredibly grateful she said no, as I’d hate to be in any type of business relationship with her.

Sweet!

I don't blame you at all!

former player

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2925 on: April 04, 2022, 02:29:43 AM »

My FIL turned out to have zero retirement plans other than working until he died.  After his wife passed, we helped him buy a house near us where he could live semi-comfortably between social security and rolling his former home's equity into an annuity.  We covered the $60K down payment on his new house with the deal that he covered the mortgage payments, but the house and the loan are in our name.  He's effectively renting from us at cost (which is well below market rates).  This has actually worked out quite well, as he can live close by, and he has a level of financial stability he didn't have before.  He also gets to spend time with the grandkids, and we have a built-in babysitter on occasion.

Enter SIL.  We just heard that SIL is insanely jealous that she doesn't get to share in the equity gains from this house when he eventually passes.  While I could care less what SIL thinks, she does have a way of creating drama with everything she touches.  I'm sure we'll be hearing about this for years to come.

Wow.   I would suggest you tell her to cough up her own cash for a down payment, buy a different house for your dad and convince him to move into it.  She can undertake the all the risk to that money if your dad doesn't keep the house up or the market is way down when it comes time to sell or rent the house.  You'll then gladly sell the house you bought with your own money or rent it to strangers for way more cash per month.   Otherwise, STFU.

Jeesh, but I just have zero patience with people like this.

Even better, we had asked SIL to contribute to the house or moving expenses when he was moving. She refused at the time, as she claimed to not have the money at the time.

With the benefit of hindsight, I am incredibly grateful she said no, as I’d hate to be in any type of business relationship with her.

Sweet!

I don't blame you at all!
bib is the perfect answer to any future griping from SIL about wanting a cut.

iluvzbeach

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2926 on: April 04, 2022, 09:19:37 AM »
@former player, what the heck is bib?

former player

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2927 on: April 04, 2022, 11:23:08 AM »

Zamboni

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2928 on: April 04, 2022, 11:27:09 AM »
Oh, that's such a responsible definition of bib.

I was guessing "bring it, bitch." So then I thought, no, former player would never be so crass, we must search urban dictionary!

Which led to:
Bib
A coward. Someone who won't take risks. They have no nuts and their scrotum is nothing but a bib for their penis.

OMG, I loooove learning!

 

shadesofgreen

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2929 on: April 04, 2022, 02:43:10 PM »
Oh, that's such a responsible definition of bib.

I was guessing "bring it, bitch." So then I thought, no, former player would never be so crass, we must search urban dictionary!

Which led to:
Bib
A coward. Someone who won't take risks. They have no nuts and their scrotum is nothing but a bib for their penis.

OMG, I loooove learning!

That is funny!

Ladychips

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2930 on: April 04, 2022, 03:10:53 PM »
@former player, what the heck is bib?
bit in bold

I reread the bit in bold in the previous post several times trying to figure out what bib meant.  When I finally figured it out, I felt like the star idiot in a far side cartoon. MMM Forum...keeping me humble!

jeninco

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2931 on: April 07, 2022, 10:21:15 AM »
The IRS's stance doesn't make any sense . . . they own the property, and can rent it for any amount that they see fit. Or, they can own property and choose to let it sit empty, as many people do. The only way I see the IRS have any complaint is if they are trying to write off an annual loss on the property that they are intentionally renting below market value. I'm not an accountant, though, so what do I know?

So we do have a rental contract. Both my wife and FIL are attorneys, so documenting everything was pretty natural to them.

I ran this by a tax professional as well. Essentially, they told us that we shouldn’t treat it as a rental property for tax purposes.  Although they didn’t explicitly frame it this way, I believe the gap between fair-market rent and BMR rent is too small to get into taxable gift territory, and IRS rules explicitly forbid deducting expenses when BMR rent is involved.  The IRS doesn’t want people deducting business losses on things that aren’t actually a business.

Yeah, the last bit -- we bought a house for my BIL to live in, and he pays rent sometimes, when he can. (To be clear, we're fine with that: the goal was to get him safely housed.) At the advice of our tax professional, we don't treat it as a rental property, as what he's paying is pretty far below market rates.

shureShote

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2932 on: April 07, 2022, 05:27:22 PM »
The IRS's stance doesn't make any sense . . . they own the property, and can rent it for any amount that they see fit. Or, they can own property and choose to let it sit empty, as many people do. The only way I see the IRS have any complaint is if they are trying to write off an annual loss on the property that they are intentionally renting below market value. I'm not an accountant, though, so what do I know?

So we do have a rental contract. Both my wife and FIL are attorneys, so documenting everything was pretty natural to them.

I ran this by a tax professional as well. Essentially, they told us that we shouldn’t treat it as a rental property for tax purposes.  Although they didn’t explicitly frame it this way, I believe the gap between fair-market rent and BMR rent is too small to get into taxable gift territory, and IRS rules explicitly forbid deducting expenses when BMR rent is involved.  The IRS doesn’t want people deducting business losses on things that aren’t actually a business.

Yeah, the last bit -- we bought a house for my BIL to live in, and he pays rent sometimes, when he can. (To be clear, we're fine with that: the goal was to get him safely housed.) At the advice of our tax professional, we don't treat it as a rental property, as what he's paying is pretty far below market rates.

This is quite interesting to me, no experience with it. Got a couple inquiries.

So the money he is able to pay is basically just like a gift?

How does insurance work? If he has renter’s insurance (doesn’t seem likely with what you posted,  but assume anyway) and you have normal homeowners, is there a potential for a problem if something happens?

Thanks.


iluvzbeach

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2933 on: April 07, 2022, 05:43:55 PM »
We do something similar as jeninco for a family member of ours. In our case the person does not pay any rent, ever, but they do pay utilities. Our insurer covers the property as if it’s a rental property, even though they know it is not. We have a written “occupancy agreement” that we worked with an attorney to draw up and our family member is required to keep a renters policy for their contents. We drew up the occupancy agreement so that it is clear we can still access the property at any time and to also make it binding in that no one else is permitted to live there aside from our relative and her one small dog.

shureShote

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2934 on: April 07, 2022, 08:39:35 PM »
Thanks. This must be common enough that insurers have a page on it.

NorCal

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2935 on: April 08, 2022, 10:03:23 PM »
The IRS's stance doesn't make any sense . . . they own the property, and can rent it for any amount that they see fit. Or, they can own property and choose to let it sit empty, as many people do. The only way I see the IRS have any complaint is if they are trying to write off an annual loss on the property that they are intentionally renting below market value. I'm not an accountant, though, so what do I know?

So we do have a rental contract. Both my wife and FIL are attorneys, so documenting everything was pretty natural to them.

I ran this by a tax professional as well. Essentially, they told us that we shouldn’t treat it as a rental property for tax purposes.  Although they didn’t explicitly frame it this way, I believe the gap between fair-market rent and BMR rent is too small to get into taxable gift territory, and IRS rules explicitly forbid deducting expenses when BMR rent is involved.  The IRS doesn’t want people deducting business losses on things that aren’t actually a business.

Yeah, the last bit -- we bought a house for my BIL to live in, and he pays rent sometimes, when he can. (To be clear, we're fine with that: the goal was to get him safely housed.) At the advice of our tax professional, we don't treat it as a rental property, as what he's paying is pretty far below market rates.

This is quite interesting to me, no experience with it. Got a couple inquiries.

So the money he is able to pay is basically just like a gift?

How does insurance work? If he has renter’s insurance (doesn’t seem likely with what you posted,  but assume anyway) and you have normal homeowners, is there a potential for a problem if something happens?

Thanks.

The way to think about it is a categorization issue. This type of property will be categorized differently depending on who’s looking at it. An insurance company will think of it like a rental property and insure it as such. The IRS will say “it’s not a business” (which is what they really care about). I don’t even recall how the mortgage broker classified it, but I seem to remember they were looking into categorizing it as a primary residence, since my FIL was involved in the purchase decision.

jeninco

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2936 on: April 11, 2022, 12:06:23 PM »
The IRS's stance doesn't make any sense . . . they own the property, and can rent it for any amount that they see fit. Or, they can own property and choose to let it sit empty, as many people do. The only way I see the IRS have any complaint is if they are trying to write off an annual loss on the property that they are intentionally renting below market value. I'm not an accountant, though, so what do I know?

So we do have a rental contract. Both my wife and FIL are attorneys, so documenting everything was pretty natural to them.

I ran this by a tax professional as well. Essentially, they told us that we shouldn’t treat it as a rental property for tax purposes.  Although they didn’t explicitly frame it this way, I believe the gap between fair-market rent and BMR rent is too small to get into taxable gift territory, and IRS rules explicitly forbid deducting expenses when BMR rent is involved.  The IRS doesn’t want people deducting business losses on things that aren’t actually a business.

Yeah, the last bit -- we bought a house for my BIL to live in, and he pays rent sometimes, when he can. (To be clear, we're fine with that: the goal was to get him safely housed.) At the advice of our tax professional, we don't treat it as a rental property, as what he's paying is pretty far below market rates.

This is quite interesting to me, no experience with it. Got a couple inquiries.

So the money he is able to pay is basically just like a gift?

How does insurance work? If he has renter’s insurance (doesn’t seem likely with what you posted,  but assume anyway) and you have normal homeowners, is there a potential for a problem if something happens?

Thanks.

The way to think about it is a categorization issue. This type of property will be categorized differently depending on who’s looking at it. An insurance company will think of it like a rental property and insure it as such. The IRS will say “it’s not a business” (which is what they really care about). I don’t even recall how the mortgage broker classified it, but I seem to remember they were looking into categorizing it as a primary residence, since my FIL was involved in the purchase decision.

Yeah, probably this. I blessed the arrangement in the first place, but MrInCO takes care of the details. I think the IRS probably doesn't care, as long as we're not claiming that it's a business thing.

Catbert

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2937 on: April 16, 2022, 11:42:34 AM »
^^^ I suspect it should be treated like a vacation/second home.  If you itemize you can deduct property taxes and mortgage interest (subject to SALT limitations) but nothing else.  When you sell, you'll owe regular capital gains tax.

AMandM

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2938 on: April 21, 2022, 02:47:37 PM »
I'm curious about this, too, as we may be in a similar situation in the future. Do you report the rent as "additional income" and pay income tax on the whole amount (no deductions)?

Zamboni

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2939 on: April 21, 2022, 05:26:38 PM »
^Not a tax professional here, but I can't imagine why you would claim it as income if a family member is paying part of a mortgage on a home you own. Especially if you are letting them stay in your house for below market value, on paper it would likely come out as a net loss if it was treated as rental income (remember there are things like depreciation on appliances, maintenance costs, etc. that landlords can write off as deductions.)

SwordGuy

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2940 on: April 21, 2022, 06:09:57 PM »
^Not a tax professional here, but I can't imagine why you would claim it as income if a family member is paying part of a mortgage on a home you own. Especially if you are letting them stay in your house for below market value, on paper it would likely come out as a net loss if it was treated as rental income (remember there are things like depreciation on appliances, maintenance costs, etc. that landlords can write off as deductions.)

If it's treated as a business, the IRS will tax them on what they SHOULD HAVE charged for rent instead of what they actually are charging for rent.   And that's fair because if they are renting it out at well below market value, it's a family charity thing instead of a business, i.e., it would be a sham business if they treated it as one.

Only a tax accountant could tell them which option would be better dollar-wise.

jeninco

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2941 on: April 25, 2022, 04:11:04 PM »
^Not a tax professional here, but I can't imagine why you would claim it as income if a family member is paying part of a mortgage on a home you own. Especially if you are letting them stay in your house for below market value, on paper it would likely come out as a net loss if it was treated as rental income (remember there are things like depreciation on appliances, maintenance costs, etc. that landlords can write off as deductions.)

If it's treated as a business, the IRS will tax them on what they SHOULD HAVE charged for rent instead of what they actually are charging for rent.   And that's fair because if they are renting it out at well below market value, it's a family charity thing instead of a business, i.e., it would be a sham business if they treated it as one.

Only a tax accountant could tell them which option would be better dollar-wise.

Haha, yes. MrInCO had a long conversation with our tax accountant about how to handle it, so I assume we're all on the up-and-up (because those two are SUCH crazy rule-followers).

I pay the utilities -- the family member has only SSDI income to use for his other expenses.

It's interesting, because it sounds in writing like we're totally being taken advantage of, but we went into this eyes wide open, the family member has done his level best to hold up his end of the deal, and we're comfortable with making sure that he's housed and warm (as opposed to dying of exposure on the street during a depressive episode). To forcibly drag this somewhat back nearer the original topic, MrInCO's dad left a little $ to be used to care for this family member who has declined to spend it so far.  I guess it's not "drama" if we don't make it into some, though!

Taran Wanderer

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Re: Inheritance Drama: You Got Any? Stories Wanted.
« Reply #2942 on: April 25, 2022, 09:39:46 PM »
I guess it's not "drama" if we don't make it into some, though!

It’s actually kind of refreshing to hear your story after the many examples of selfish and short-sighted behavior. Your family member is fortunate to have people so thoughtful and caring.