Questions about rmd’s

[Allen Trent]

Thats not happening . We tried for a decade to get him to give substantial money to us kids . We tried to get him to do trusts . He refuses . He wants to control his money in his name . Anything under $13 mil is not taxable .He can write a check write now for $12.92 million to us kids tax free and use his whole exemption . He has us on all cd’s payable on death .

That estate tax exemption level expires in 2025 & reverts back to 2017 levels, meaning there is a good chance that if he lives 2 more years, the IRS could take 50% of every dollar over $6M or so.

I am seeing a ton of high net worth farms & businesses file estate tax returns right now so that the married couple can take the $26M estate tax exclusion now that expires in 2025.

PS- the IRA he owns & any annuities will also have federal & state income taxes due at death in addition to estate taxes on those amounts. IRA is all income taxable to heirs & NQ annuity have the gains taxable to heirs.

While full planning with irrevocable trusts & estate tax planning would be ideal, at least a basic trust to name as owner of things like CDs would be better than TOD listing at banks. TOD sometimes dont split it up to all bene or address what happens if primary predeceases contingent

Lastly, lastly, if any of his primary bene are doing great financially & dont need some of the money, it can be disclaimed or partially disclaimed to flow to contingent bene. Important to have beneficiary designation listing per stirpes so it can flow down the ancestry.

IE: my mom died in 2019 & had myself & my sister as 50/50 primary bene, per stirpes. I have done very well financially & am still in a very high tax bracket with my own pension & 401k, etc. So, I chose to receive my share of the tax free or low tax items, but i disclaimed My share of the taxable IRA. A disclaimer treated me as predeceasing my mom & thus it flowed to contingent per stirpes (my 4 kids). My 4 kids were 16-24, in much lower tax brackets & they now get an inherited IRA RMD check every Christmas from Grandma & will receive an escalating RMD check for 50-60 more years (old inherited stretch ira laws because my mom died in 2019 before new inherited ira law requiring it to be emptied within 10 years

 

[Allen Trent]

He can gift $12.92 million right now and there’s no taxes . Anything over $17k you have to file on your taxes . It goes against his $12.92 million lifetime exclusion . Nobody pays any taxes . Example he writes me check for $5 mil . He files on his taxes . He still has $7.92 mil lifetime exclusion left when he dies .

Not exactly true. It isn't his tax return. He would have to file an actual estate tax return to take part of his lifetime exemption. Lots of people are doing that between now & 2025. Lawyers & CPAs specializing in this are going to run out of time to assist high net worth families as 2025 is getting closer & closer

Plus, you dont file taxes as thee recipient of a gift. If the giver exceeds the $17k annual gift allowed, they have to file an Estate & Gift tax return & they either pay gift taxes as the giver or take a hit now on their lifetime exclusion amount

 

[LostDollar]

Lastly, lastly, if any of his primary bene are doing great financially & dont need some of the money, it can be disclaimed or partially disclaimed to flow to contingent bene. Important to have beneficiary designation listing per stirpes so it can flow down the ancestry.

IE: my mom died in 2019 & had myself & my sister as 50/50 primary bene, per stirpes.

The disclaiming thing and where the disclaimed money goes has always been a bit confusing to me.

Is "per stirpes" the key thing there? If that phrase had not been present and you disclaimed, would the disclaimed money be split among the other heirs, in your example 100% to your sister and your kids would have had nothing?

A person disclaiming does not get to designate the specific other beneficiary (when there are more than two beneficiaries listed in the trust document) they want their disclaimed amount to go to?

 

[DonP]

You can't change ownership on an IRA like that. An IRA cannot be given to another person.

You're talking about the gift tax/estate tax exclusion. I'm talking about income taxes.

Correct I was talking about his over 30 cds in regular accounts . I tied that in that he refuses to listen to his kids .

 

[DonP]

Not exactly true. It isn't his tax return. He would have to file an actual estate tax return to take part of his lifetime exemption. Lots of people are doing that between now & 2025. Lawyers & CPAs specializing in this are going to run out of time to assist high net worth families as 2025 is getting closer & closer

Plus, you dont file taxes as thee recipient of a gift. If the giver exceeds the $17k annual gift allowed, they have to file an Estate & Gift tax return & they either pay gift taxes as the giver or take a hit now on their lifetime exclusion amount

Correct . But let’s say someone has $10 mil in cd’s . He can gift all that right now and file an estate and gift return . Nobody pays any taxes . Then he’s got $2.92 mil left when he dies . $12.92 mil lifetime minus $10 mil given out . The estate tax current rules ends at yr end 2025 . If Trump and republicans get in it’ll be extended . If not I’ll hag my 94 yr old day upside down till he gifts $12.92 mil by yr end 2025 . Lol

 

[LostDollar]

Correct I was talking about his over 30 cds in regular accounts . I tied that in that he refuses to listen to his kids .

Do you suppose he might be seeing his kids as saying gimme, gimme, gimme; valuing his money but not him?

If so he might not really give two figs whether his kids or the IRS gets the money!

 

[Allen Trent]

The disclaiming thing and where the disclaimed money goes has always been a bit confusing to me.

Is "per stirpes" the key thing there? If that phrase had not been present and you disclaimed, would the disclaimed money be split among the other heirs, in your example 100% to your sister and your kids would have had nothing?

A person disclaiming does not get to designate the specific other beneficiary (when there are more than two beneficiaries listed in the trust document) they want their disclaimed amount to go to?

Yes, per stirpes is key. If you dont have your beneficiary designation of a policy, account, annuity or trust. If it doesnt include per stirpes, it will be per capita, meaning the surviving beneficiary would receive it & not your heirs. Had my mothers IRAs just listed my sister & me as 50/50 & didnt include the per stirpes clause, my sister would have gotten 100% after I disclaimed it. No matter what property or inheritance you are disclaiming, a qualified disclaimer means you have no say in who receives it. A disclaimer is merely saying "treat me as if I already died & let the inheritance flow to the next person in line". Per stirpes "by the roots" means to let if flow to down to my next in line ancestry, etc

 

[Allen Trent]

Do you suppose he might be seeing his kids as saying gimme, gimme, gimme; valuing his money but not him?

If so he might not really give two figs whether his kids or the IRS gets the money!

possibly, but he is for certain saying that he would rather the IRS be a recipient of 40-50% of his estate rather than his kids or charity, etc.

More than likely, the skill that helped him to create, accumulate & retain wealth is being more of a saver than a spender & a bit of control & this is causing him to not be willing to spend 1/2 or 1% of his money now to pay lawyers & attorneys to protect a large portion of his money from going to the government.

I am sure the lawyers have ways to get it out of his name into an irrevocable trust without it going to the children today or being controlled by the children

 

[DonP]

And that post kinda makes my point. I would be very, very, very pi$$ed if I had kids making those kinds of comments to me.

Lol incorrect !!! I spend around 65 nights a yr at my fathers. I purposely drop leads in his area so I spend time with him . My parents were married 61 yrs and my mother died 5 yrs ago . I traveled 4 hrs every other week for 2 nights for 3 yrs to see her n the nursing home . Our family is 1 for all and all for one. My fathers stubborn and wants us to get every penny . And your damm right we’ll do what’s necessary to give as little as possible to Uncle Sam . It’s called an act of love to take care of your estate for your kids . It’s selfish to not to . Everything I do is for my kids when I’m gone .It’s called love

 

[DonP]

possibly, but he is for certain saying that he would rather the IRS be a recipient of 40-50% of his estate rather than his kids or charity, etc.

More than likely, the skill that helped him to create, accumulate & retain wealth is being more of a saver than a spender & a bit of control & this is causing him to not be willing to spend 1/2 or 1% of his money now to pay lawyers & attorneys to protect a large portion of his money from going to the government.

I am sure the lawyers have ways to get it out of his name into an irrevocable trust without it going to the children today or being controlled by the children

Actually 1/2 his wealth was from inheritance. He inherited a ton of land from the 50’s and 60’s . But yes he’s a big saver and is careful with his money . He likes to say he respects money .