Any CPAs or financial experts on?

JenniC1135 · January 2012

My dad has terminal cancer and is working on what he wants to do as far as leaving money to various people in the family. He has a will, and I will be the executor, but he has also said that before he dies, he'd like to give some money to my 2 older brothers and me. I think I have determined that he can give up to 13K to me tax free per year (tax free for me, he pays taxes on it or would already have paid taxes on it when he earned it , right?)

My question has to do with my brothers. They both have led irresponsible lives that leave them with various debts against them - past due child support (for children who are now adults in their late 20s,) tax liens, etc. My dad is concerned that any money he gives them, either before or after he dies, will be taken by the government because of their obligations, and he doesn't want that to happen. Without passing judgment on them needing to pay what they owe to whomever they owe it, is there any way he can give them the money without it being garnished? I've suggested maybe putting it into a trust in their children's names with me as the trustee, but he doesn't want me to have to deal with them when it comes to money. Really he doesn't want to give them anything at all, but knows it would be WW3 if he leaves everything to me and my stepmom and figures that giving them something now will shut them up about it all.

EMT · January 2012

I'm a CPA although tax/estate tax is not my area of expertise. I *believe* that if they put their inheritance in their account then it could be garnished.

I did want to say that he could actually give you/your husband more than 13K a year tax free. He can give you and your DH each 13K and his wife can also give each you and your DH 13K. Actually, depending on the size of the estate, he could give you a lot more and it would just be deducted from the amount of the estate that is tax-free when he passes.

JenniC1135 · January 2012

Thanks. I don't think he is thinking of a bigger amount, but who knows. Apparently my stepmom is annoyed that he wants to do it at all, so I imagine the S will be hitting the fan over it all soon.

Bride2b2004 · January 2012

I am sorry to hear about your dad. I lost my mom to cancer when she was 52 and I was pg with DS1, and I remember how hard it was to deal with.

I am a CPA and attorney. I have some suggestions, which should not be construed as legal advice. This is a case where an experienced Trust & Estate attorney can be very helpful and worth the money. If your dad sets up a good Trust, he can specify who gets what money, when, and how it may be used. Sounds ideal for your brothers. Creditors cannot touch the assets or even the income if the use is specified by the decedent and the proper language is used. He will need a Trustee, but maybe in this case a 3rd party administrator trustee would be best. Otherwise, it sounds like the money will just be blown or taken by creditors.

Also, in most cases it is best to give away what you can during life and the attorney should be able to work out a plan for that. For 2011, the gift tax exclusion is $13,000 per taxpayer for each recipient. There is also a lifetime gift exemption of $5 million (the annual gift amts are not part of this).

Hope this helps

JenniC1135 · January 2012

Thanks, Bride2B, that is super helpful to know.

Want a personalized experience?

Any CPAs or financial experts on?

Re: Any CPAs or financial experts on?

Choose Another Board

Search Boards