UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Next Thread
Author: philliph2 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5748  
Subject: Inheriting but not through inheritance Date: 6/19/2006 3:47 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
My 82 yr old mom just took me out of her will (about $500K at this time). Not as a punishment, but my sister who lives close by has been her sole caregiver and my sister (no kids, no mortgage, no savings, poor job) has had a tough life. I am doing reasonably well (2 kids, mortgage, some savings, good job) and I live across the country. So my mom decided to cut me out because I am doing all right and my sister isn't and my sister is helping out so much. Anyway, I found out after the fact that I am out. I was not happy with the decision and complained to my sister. She would end up with more money/assets as a single person than I have with a family, college educations and a job that could end up in China any day. My sister and I talked and she said not to worry, that she would take care of me and send me my share anyway. I believe her and we don't want to upset and maybe argue with our mom about changing it back again.

Questions:
There would be no inheritance taxes for my sister, but can my sister just give me $250K?
Will, I have to report this income and be taxed?

Thanks for any help, Phil
Print the post Back To Top
Author: NaggingFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4682 of 5748
Subject: Re: Inheriting but not through inheritance Date: 6/19/2006 5:00 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
As you say, that's not an inheritance. That's a gift from your sister, and she would have to file gift tax forms when she gifts it to you. For more information you can ask at the Tax Strategies board.

It's your mom's money, and hers to do as she wishes with. She doesn't have to give it to either of you.

- Megan


Print the post Back To Top
Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4683 of 5748
Subject: Re: Inheriting but not through inheritance Date: 6/19/2006 5:06 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 9
my sister who lives close by has been her sole caregiver

Trust me on this one - this is more work than you can ever imagine.

She would end up with more money/assets as a single person than I have with a family, college educations

So ?

I believe her and we don't want to upset and maybe argue with our mom about changing it back again.

my sister who lives close by has been her sole caregiver

Trust me on this one - this is more work than you can ever imagine.

The lines double posted are entirely intentional.

rad

Print the post Back To Top
Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4684 of 5748
Subject: Re: Inheriting but not through inheritance Date: 6/19/2006 5:15 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 5
philliph2: "My 82 yr old mom just took me out of her will (about $500K at this time). Not as a punishment, but my sister who lives close by has been her sole caregiver and my sister (no kids, no mortgage, no savings, poor job) has had a tough life. I am doing reasonably well (2 kids, mortgage, some savings, good job) and I live across the country. So my mom decided to cut me out because I am doing all right and my sister isn't and my sister is helping out so much. Anyway, I found out after the fact that I am out. I was not happy with the decision and complained to my sister. She would end up with more money/assets as a single person than I have with a family, college educations and a job that could end up in China any day. My sister and I talked and she said not to worry, that she would take care of me and send me my share anyway. I believe her and we don't want to upset and maybe argue with our mom about changing it back again.

Questions:

There would be no inheritance taxes for my sister, but can my sister just give me $250K?

Will, I have to report this income and be taxed?"


Being the sole cargiver is extremely taxing, and I would describe your mother's actions as reqarding her caregiver as opposed to punishing you or cutting you out. After all, it is your mother's money to with as she wishes.

It was not your sister's decision, why complain to her. It was your mother's decision.

Your sister can give you anything that she owns. If the value of the gift is greater than the annual exclusion, then she would need to file a gift tax return. She would also use some of her lifetime exclusion and not owe gift taxes until the lifetime exclusion was full gone.

You generally do not owe taxes on gifts. And money from your sister as described above would be a gift and not an inheritance.

I am with the first two responders on this one.

Regards, JAFO



Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4685 of 5748
Subject: Re: Inheriting but not through inheritance Date: 6/19/2006 8:16 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
When the time comes and she really wants to give you your share she CAN "disclaim" whatever part of her inheritance she wants. That evades the "gift" issue, however, it is doubtful that sister gifting you $250K will ever impact on her estate taxes, but if it did, the effect, if she's still single when she dies, would be for you, as her sole heir, eventually paying estate tax on the amount of the gift. It's really more complicted than that, but you get the idea I hope.

ed

Print the post Back To Top
Author: GromitJS Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4686 of 5748
Subject: Re: Inheriting but not through inheritance Date: 6/19/2006 8:45 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Phil,

Gifts to you are not taxable income to you... of course any earnings on these assets after your receive them are taxable.

Yes your sister can just give you $250k. Since she would exceed the $12,000 annual gift allowance she would need to file a Gift Tax return. However, she's still be far below the threshold where any of this gift would be taxable to her.

Non-tax issues: I'm in agreement with most of the other comments, but I can understand your attitude a little about being completely cut out.

However, the argument that you're entitled to have a greater net worth because of your family/education/job status isn't very strong to me... you chose to have kids, college education helps but doesn't automatically = more $$$, and if you lose your job you'll have to get a new one just like your sister would have to do if she lost her job. To me the best answer is this:

1) Since your sister most likely prevented your mom from paying for a nursing home or visiting caretaker, your sister should receive an equivalent level of $$$ that was saved by having her be the caretaker. Like others have said being a sole caregiver is not easy, so when determining the appropriate $$$ for this service be VERY generous.

2) Whatever net amount remains should be split 50/50 between you and your sister.

Gromit

Print the post Back To Top
Author: philliph2 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4687 of 5748
Subject: Re: Inheriting but not through inheritance Date: 6/20/2006 7:31 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 5
Thank you all for your replies.

I tried to do some research into this before I asked, but I could not find a scenario like this that I was comfortable with.

Per your info, I was able to search for keywords like, 'gift tax return forms' and 'lifetime exclusion' and 'disclaim inheritance' and now I have a lot better idea of the options and consequences.

My lead in story got some deserving shots, but so you don't think me a total greedy, uncaring soul, I need to fill in some holes.

I realize that this is my mom's decision and I was not going to burden her with my dissatisfaction so I went to my sister. It was not easy for me to do for fear of some comments similar to what some of you mentioned. This just happened this weekend. I have always not counted on an inheritance, but I have thought the possibility likely. Then it was pulled, expectations dashed.

My mom has been in an assisted living center for 3 years after I insisted that the burden on my sister was too great. She felt very guilty about taking my mom there, but I convinced her to. My sister still takes her to appointments, does the bills and taxes, takes her to the library, she does a lot. But, my mother has been generously supplementing her income for many years and I never resented it for a second, because of all the care she was providing that I could not.

God willing, this will be a moot point and there will be very little inheritance. At a certain point, I would not take any of the inheritance. I told this to my sister. 1/2 of $500k is a lot of money and life changing for both of us. 1/2 of $50k would not be life changing for me, but $50K would be for my sister.

Thanks for reading, lots of emotions, expectations, family history, justifying...there is never an easy answer.

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
Author: kaudrey Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4688 of 5748
Subject: Re: Inheriting but not through inheritance Date: 6/20/2006 10:16 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Phil,

Personally, based on my relationship with my sister, I didn't feel it was wrong of you to talk to your sister about this, and I was OK with the fact that you did this without going to your mother.

It sounds like you and your sister have discussed different scenarios and are mature adults who can figure out what is best for both of you. I think it's not really about money, it's about helping out family when you can. If my sister ever needed help, I would help.

The money your mother has could help both of you, and I think it's great that your sister wants to help your situation out as well as getting herself set up.

Although my parents will leave everything to my sister and I equally, I do have experience with family members who need financial help. My parents give my mother's sister money every year, and have done so for about 5 years or so. Mu aunt and her husband are in their 70s, still working, but making very little money, and have no savings. Mom and Dad give them about $10,000 a year, just to help out.

Every year at Christmas, my father pulls me aside and tells me that they gave them money. I just say "OK". I tell him he doesn't have to tell me - that it's their money, that the kids (me and sis) don't expect anything from them, that we don't need it, etc.

I digress.

Anyway, best of luck to you and your sister, and I hope your mom lives to a ripe old age!

Karen

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
Author: Maggie310 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4704 of 5748
Subject: Re: Inheriting but not through inheritance Date: 7/24/2006 10:10 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
I was the primary care giver, it is tons of work.

I bet it hurt that your Mom did that without talking to you about it. I know she didn't have to leave the money to anyone, but if she was capable of making changes, she was capable of telling you in a kind way what her reasons were. It's not the money.

I'm sorry your were hurt.

((((maggie))))

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Next Thread
Advertisement