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Financial Planning / Tax Strategies


Subject:  Re: Unexpected windfall Date:  6/22/2007  1:49 PM
Author:  TMFPMarti Number:  94981 of 127513

"Take it and pay for your son's college. Invest it. Do something with it, I don't know what to do with it."

You have entered the land of Marti's Unsolicited Advice. Proceed at your own risk.

Yikes! I thought the June Cleaver "Oh, I have no head for figures--you handle everything" model had gone out of style.

More than 30 years ago I sat in a living room in Chicago trying to collect taxes from a widowed New Orleans belle who confessed, "I was raised to be a lady. I can't do anything to support myself, and since my husband died and left me penniless I have to rely on my son."

I can envision the day you'd have to face 2Apocolypse. Your father dies, and you have to manage all your mother's affairs, perhaps at a time of your life that it's not the best use of your time. Worse, she could be broke as well as bereft.

As has already been noted, there are tax reasons she shouldn't be giving her money away. This is also a great time for your parents to be looking at their financial futures and seeing what tinkering is necessary.

I see nothing wrong with her turning to you for advice, but IMO it's imperative that you involve her in the process. I think you also need to treat it as their money, not yours. For example, you mentioned Hidden Gems. I'm a great HG fan and own some, but extensive investment in them could be highly inappropriate for them because of the risk factor.

From a tax perspective you definitely want to keep everything in her name and under her SSN. Otherwise you'll be drowning in nominee paperwork. I would then suggest a thorough evaluation of their financial future, which would then guide investment choices. There's nothing wrong with a 6 month CD or even an MMA while you sort things out.

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