No. of Recommendations: 1
Another problem/idea is that she does not want to leave the money in her name but put it in my or my sisters name.

In addition to possible gift tax problems, transferring assets to her kids has a lot of pitfalls including;

1) The child gets sued.
2) The child gets divorced.
3) The child or their spouse flaks out and spends the money or declares bankruptcy.
4) Any earning on the money will be taxed at the child's tax rate, which is likely higher.
5) If the child should die before the parent then the money will go to the child's estate.
6) It will make it harder for any grandkids to qualify for any need based scholarships.
7) Stocks that are in an estate are passed on at a “stepped up basis” without paying capital gains(as I understand it)

Get professional advice if you try to do this. I am not an expert but when I have heard this mentioned before it was usually about people trying to qualify for a subsidized nursing home. The problem with this is that the quality of indigent care in hospitals and nursing homes is often horrible and most people would only use them as a last resort.

... she is only 60...

So unless she is in failing health then she needs to plan on living another 30+ years on what she has saved? Unless she has significant assists that you didn't mention then she may want to rethink retiring early. Has she even priced what it will cost for health insurance until Medicare kicks in? Assuming that she will be eligible for Medicare at 65 then working until she is 63.5 years old would allow her to use the 18 months of COBRA to get to 65.

... pension plan...
I agree with the prior post that the details of the pension plan need to be checked on. The situation sounds very unusual. Could it be that the ten-year period is really a guaranteed payout period and if she lives longer than ten years it will still continue but just not pass anything on to her estate after ten years? Guaranteed payout periods are sometimes used to cover the situation where someone elects the monthly sum instead of a lump sum then dies shortley thereafter without have received much value from the pension.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.