Mom receives pension of 50K/year from state, no COLA. Dad also receives pension, much less but something. Mom has tapped into SS, Dad hasn't yet. Home pretty much paid off, value around 600K. I made a thread months before about them and was able to get them to come around. My dad now is losing 12K betting on oil stocks (losing $$ isn't a new thing for him) and my relatively good (flat) performance helped to cement the idea that indexing is a pretty good, low risk way of investing.
So now we're talking about avoiding taxes. Particularly NJ.
From what someone else on MMM said, NJ is the only state with an inheritance tax and an estate tax. I'm not sure what estate tax is or if you have to have a certain amount. A Forbes article said it's at 675K versus federal's 5.34 million. Needless to say, we're trying to avoid it.
An idea I had was for them to transfer their 401k assets (which they haven't touched and likely won't for decades) to me and that I would hold onto it until they need it. If they don't need it, then at least we avoided big taxes. Thing is, I don't know anything about this type of transfer, if it's even possible, is it practical, how it would affect my taxes or theirs. Would they have to withdraw and pay higher tax or is there a way to just transfer assets up to a certain amount? Would it affect my 401K? Heard 14K is the limit on another thread.
Has anyone done something similar in a high tax state? Transfer assets that are likely not needed for retirement to children to avoid tax. And the children can hold onto it for the parents and let the parents dip into it should they ever need it?
I guess another concern longer term is that if/when I marry, the partner could take half the share which could include the money set aside for parents but moved to me for tax purposes. Is that considered a risk or is it recommended to mention that in a prenup? Just in case, no decision is made to move assets to me yet, just wondering.