dividing up gift & estate money
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Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date
dividing up gift & estate money P.Schuman 11-13-2006
Posted by P.Schuman on November 13, 2006, 4:58 pm
wonder how you would approach this situation....

wife comes from a large family and they have some money...
they screwed up, and have not setup a trust for the kids, etc
parents are in their 80's

So - they are thinking of just gifting $12,000 to everyone :)
BUT - how do you gift to the different size families & grandkids
without creating bad feelings...

SS (married + 2 kids)
GS (married + 1 kid)
PK (married + 3 kids)
JS (married +1 kid)
MS (single + no kids)

also - just starting to read about estate taxes, trusts, etc...
What SHOULD they have done, or can still do at this point ?


Posted by Gil Faver on November 13, 2006, 5:56 pm
they can certainly still do some estate planning (they are not dead yet),
and should do so ASAP. I don't know what their estate is worth, or if they
will be "lucky" enough to die during the one year when the estate tax goes
away before it pops back into life.

I would give everyone $12k (or whatever the current max is) right now. I
would do so again January 1, 2007 and every January 1 from now on.

If they want to even out the gifts (per stirpes rather than per capita) I
would do so in the estate distribution, or use up some of the unified tax
credit now to do so. That evening out should be discussed with the estate
planning attorney.


> wonder how you would approach this situation....
>
> wife comes from a large family and they have some money...
> they screwed up, and have not setup a trust for the kids, etc
> parents are in their 80's
>
> So - they are thinking of just gifting $12,000 to everyone :)
> BUT - how do you gift to the different size families & grandkids
> without creating bad feelings...
>
> SS (married + 2 kids)
> GS (married + 1 kid)
> PK (married + 3 kids)
> JS (married +1 kid)
> MS (single + no kids)
>
> also - just starting to read about estate taxes, trusts, etc...
> What SHOULD they have done, or can still do at this point ?
>


Posted by P.Schuman on November 14, 2006, 8:20 am

> they can certainly still do some estate planning (they are not dead yet),
> and should do so ASAP. I don't know what their estate is worth, or if they
> will be "lucky" enough to die during the one year when the estate tax goes
> away before it pops back into life.
>
> I would give everyone $12k (or whatever the current max is) right now. I
> would do so again January 1, 2007 and every January 1 from now on.
>
> If they want to even out the gifts (per stirpes rather than per capita) I
> would do so in the estate distribution, or use up some of the unified tax
> credit now to do so. That evening out should be discussed with the estate
> planning attorney.
>
>
> > wonder how you would approach this situation....
> >
> > wife comes from a large family and they have some money...
> > they screwed up, and have not setup a trust for the kids, etc
> > parents are in their 80's
> >
> > So - they are thinking of just gifting $12,000 to everyone :)
> > BUT - how do you gift to the different size families & grandkids
> > without creating bad feelings...
> >
> > SS (married + 2 kids)
> > GS (married + 1 kid)
> > PK (married + 3 kids)
> > JS (married +1 kid)
> > MS (single + no kids)
> >
> > also - just starting to read about estate taxes, trusts, etc...
> > What SHOULD they have done, or can still do at this point ?
> >
>

I think - from a family point of view -
that things need to be distributed evenly across all
and not "award" the larger family with more,
and the single person with less....

So - I think it will go something like this....
16 total people x $12,000 = $192,000 in gift money
Then - maybe re-distribute it evenly from each family
so that it's more like $192 / 5 family units...
and that would make it about $38k per family.


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for
a FEW lines to add context, the previous post is deleted.


Posted by Gil Faver on November 14, 2006, 8:52 am

"> So - I think it will go something like this....
> 16 total people x $12,000 = $192,000 in gift money
> Then - maybe re-distribute it evenly from each family
> so that it's more like $192 / 5 family units...
> and that would make it about $38k per family.

you, like me, prefer per stirpes vs. per capita. However, your plan will
invoke gift tax (or partial consuption of the unified credit). Which is ok,
but needs to be considered as part of a well thought out estate plan. I
would hate to use up some of that preciaous unified credit with cash gifts,
if it could be put to better us in conjuncition with an estate plan (such as
putting assets into a trust, at a reduced future value or reduced value as
part of a family partnership, etc).



>
>
> ======================================= MODERATOR'S COMMENT:
> Please trim the post to which you are responding. "Trim" means


Posted by joetaxpayer on November 14, 2006, 11:24 am


P.Schuman wrote:
>>> parents are in their 80's
>>>
>>>So - they are thinking of just gifting $12,000 to everyone :)
>>>BUT - how do you gift to the different size families & grandkids
>>>without creating bad feelings...
>>>
>>>SS (married + 2 kids)
>>>GS (married + 1 kid)
>>>PK (married + 3 kids)
>>>JS (married +1 kid)
>>>MS (single + no kids)
>>>
>>>also - just starting to read about estate taxes, trusts, etc...
>>>What SHOULD they have done, or can still do at this point ?

As my objective is to offer a different spin, let me suggest this;
First, you said parents, plural, the 80 yr olds are both alive. This ups
the gift potential to $24k per recipient per year.
80 tells me the grandkids are probably adults, are there any great
grandkids? The gift limit for a 529 college account is up to 5 years
worth of gifting, or $120K, if the goal is to maximize current gifting
dollars to empty the estate.

They could have and perhaps should, set up a trust to simplify the
distribution on their passing and avoid probate, but that advice depends
partially on the size of the total estate. If the size is high enough to
hit estate tax issues, there's all the more reason to take advantage of
gifting sooner than later.

I can't comment on the 'feelings' except to say that often, money is
given based on need. The successful child seeing little, and the needy
one getting taken care of. (if the needy one is irresponsible, an
irrevocable trust set up with rigid distribution rules can make sense,
as can the purchase of an immediate annuity for that beneficiary. So
s/he will receive an income stream vs a lump sum).

JOE


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