Free Ebook.

Enter your email address:

Delivered by FeedBurner

« Star Money Articles and Carnivals for the Week of June 15 | Main | Freedom from Budgeting »

June 19, 2009


Feed You can follow this conversation by subscribing to the comment feed for this post.

I'd say you should consult an attorney - laws differ from state to state. Perhaps a revocable living trust would work, or they can add your name to all the accounts with survivorship. This way you'd kind of "skip" probate. They can "gift" you a tax free gift each year (not sure what the max is on that now), but that may help. I'd say it's worth talking to a professional.

What is meant by "turn over their funds to me"? Do they want to give you the $ to dowith as you please now? Or do they want you to use the money for their benefit until they die, then gift the rest to you? Those are two entirely different issues questions, with different answers.

If they want you to inherit this money, you guys should create a trust, which would allow you to skip probate completely. Otherwise if they "give" the money to you now it is subject to the gift tax, which will tax any amount above $10k per year. My advice is go with the trust.

Gift Tax exemption is $13,000 a year in 2009. So your parents can combine that and give you $26,000 without the gift tax. If you figure they'll be around four years more, this'll solve the problem.

The trust is also a good idea.

If they just want you to handle their money for them, simply have them add your name to all their accounts, safety deposit boxes, insurance etc. That's what my mother did the last few years of her life. I was able to pay her bills for her and move money around.

That makes much more sense than paying gift taxes, or even hiring a lawyer at this time.

If there is anything left after they die it's too little to be subject to estate taxes, although you should probably get legal advice to determine if it's possible to avoid probate. In my state probate was 2%.

If your parents have not previously filed a gift tax return then they can gift the money to you tax free. If they file a joint gift tax return, the first $26,000 is excluded and the $94,000 balance would be covered by the unified credit. If they have a large estate then the unified credit used would not be available against the estate tax. If the estate is less than $1,000,000 then there will probably not be any estate tax and use of the unified credit this year would not be a problem.

You should visit a CPA tax professional for advice and gift tax return prepartation.

yoy can gift up to $1M pp this year, there are NO taxes involed? Perhaps you are talking about capital gains taxes if you liquidate their accounts? Again, HERE is a reason that an ameteur needs PROFESSIONAL help, get an attorney, CPA and financial planner on your team BEFORE you do this, sounds like you aren't sure of the laws, thus probably not capable of proper management either....

Get professional help. It will be a small percentage of the total amount involved. There is no end to taxes and regulations and you need someone who is up to speed on them. A good CPA is probably cheaper than a lawyer. In general, adding a name to an joint account is a very easy way to let you handle their finances. You can also make the account POD (payable on death to you). A trust is a way to protect their claim to the money while letting you administer it as trustee. Setting up a trust takes an attorney and more money. The $26,000/yr. donation (2 people x 13K) is another easy way to get the money from them to you without taxes, but it will take several years to move the entire amount. The estate tax issue looks like a non-starter since it sounds like they are well below the limit (which I believe has been changing each year).

Are they going to live a few years? Each can give you, I think, $11,000 a year. Giving you $22,000 a year will run down their small estate pretty quickly, meaning that you don't need to do anything fancy at all.

People, People, ...there is NO estat tax on (federal) on $120K, the exemption for 2009 is in MILLIONS $$, your parents can x fer it all (disregard the 13K PP advice above, it is incorrect in this situ)to you and file the estate exemtion form w/ their federal tax return in April, easy enough, suggest you involve an elder care attorney/CPA/Financial planner for proper advice first....geez

I'm going to point you to an accountant. You need to give more details, and state tax laws vary a lot. There seems to be no problem from a federal tax law perspective, but, again, it depends on the details.

Or, you can take advice from the internet, like the one above from JeffinWesterWA. Looks like he's an expert, doesn't it?

What if one or both of your parents needs care before they pass? Elder care is very expensive. If you plan on transferring the money and then having them get on medicaid, they go back 5 years to determine eligibility. When my MIL says she is saving her money to give it to the grandkids, all I can think of is I hope there is enough to take care of her for the rest of her life.

You need to talk to a good elder law attorney. You can find one at There are not only tax implications (you can give away $13k per year per person without filing a gift tax return and $1 million lifetime with filing a gift tax return but paying no taxes), but there are definintely long term care implications as Laura S. has alluded. Putting someone's name on an account as a joint account owner has some intended/unintended consequences. Best know what those are before you learn the hard way. All attorneys are not evil, nor are they created equal. You need someone with expertise in these matters.

In my experience, it costs just as much to set up and administer a trust after death as it does for a will and probate. Of course that varies state to state.

Long story short, please get some professional advice before you go forward.

Have them immediately gift you officially up to the limit, and then have them go to the bank, take out another $6000, and simply give that to you too. How will the greedy government know? Open an LLC and bill your parents for 'health consulting' to the tune of $9,500 per month. Backdate the first payment to last month and immediately mail the next bill. Keep doing this until the total is transferred. Whatever you do, avoid the death tax, which is a form of government thievery.

above is the worst advice I ever heard

[quote]"sounds like you aren't sure of the laws, thus probably not capable of proper management either...."[quote] Gotta love your thinking, when did a persons capability of managing money become based on how versed they are on "laws"?

Hold up a minute people. What are you all thinking? We are talking about a rather modest sum here. Why go through all these machinations? Why don't you have your parents gift that money to you claiming against their lifetime exemption? A CPA could tell you how to do that for a hundred bucks or less I would hope.

Are they trying to give you their money, or do they want your assistance managing their affairs for them?

If they want you to manage their financial affairs, get a Power of Attorney and as another commenter suggested have them add you as an authorized signatory to their bank accounts.

If they want to GIVE you the money NOW, then they can, as someone posted, give you $13,000 each per year tax-free. So at $26,000 per year they can transfer this money to you tax-free over a number of years. They could of course give it to you in a lump sum but have fun paying taxes on that.

If they want to give you the money upon their death, they need a will. (Well, they really need a will anyway, most likely.)

The question is to ambiguous to answer definitively.

The comments to this entry are closed.

Start a Blog


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.