Tax-Smart Strategies for Wealth Transfer: Secure Your Family's Future
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- Опубліковано 9 чер 2024
- James responds to listener Jerry’s question about the optimal time to distribute inheritance or charitable gifts: before or after passing away.
James walks listeners through four important things to consider when it comes to gifting and inheritance: your gifting goal, whether you have a strong desire to see the assets gifted within your lifetime, the tax implications of various types of gifts, and what to do with assets you plan to retain for now but are intended for future generations.
Questions Answered:
Should I give my children and grandchildren their inheritance before or after I die?
What are the tax implications to my children when I gift them my assets?
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⏱Timestamps:⏱
0:00 - Jerry’s question
2:20 - What is your gifting goal?
3:38 - Gift during your lifetime?
6:51 - Timing and priorities
9:17 - Different tax implications
12:08 - Exemption amounts
14:13 - Tax implications to child
15:33 - Proper beneficiary designations
21:41 - The right time horizon
24:45 - Summary
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This exactly what my inlaws did every christmas. 5K for the married kids, 1K for the grandkids. We never could figure out where they got the money to gift out. They were a one income blue collar couple. After they died, the answer came out. That money was a small portion of their RMD'S.
Nice. We are 61, I’m still working and we are blessed with a lot of margin. We are gifting yearly to our two kids and enjoy seeing it take a little pressure off.
A great gift to a young working person who qualifies for a ROTH IRA is to gift the amount of the contribution to that account - $7000 this year. A high school student who earns income is also likely eligible for a ROTH IRA but it will need to be set up as a custodial ROTH IRA until the person turns 21.
Two issues in our family -
Our parents had already given some property to my siblings and were about to gift a property to me… we were in there process of transferring the title… until I realized the stepped up basis on this land our family has owned for a couple decades would be brutal to me if/when I sold it. And the gift tax would hurt my mother. Instead we added language to their trust to transfer ownership to me after their death.
Retirement funds - in the interest of simplifying life for our mother, our father pushed hard to convert all of their traditional IRA money to a Roth IRA. I also recall my father saying he suspected at least some of us kids would likely be in high tax brackets and he did not want to drive us into higher tax brackets when inheriting their IRA. He wanted the lowest total net family tax impact on their hard-earned money.
I found your you tube channel about 18 months ago. I find most of your subjects interesting and all are very well done. This video you hit out of the park, for me it was the best video I have seen you do, maybe because it was very relevant to my situation. I watch several people who have financial you tube channels and you are one of my top 4 or 5 favorites. Best regards.
Excellent presentation!!! Thank you.
Excellent presentation as always
Super organized
Very clear
Very understandable
Comprehensive
Very pertinent
Excellent examples
Fabulous
What a great explanation of a none so easy subject!! Great video James!
This is one of my favorite discussions on this channel. Like many on this channel, I read the book "Die With Zero" and I agree with the premise that money received when younger is *exponentially* more powerful than receiving an inheritance in your 60s when you are already retired, particularly if used to fund a young person's education, down payment on a first home, or even a few thousand for a months-long international backpacking trip that will make amazing memories that will last a lifetime (my trip to the Eastern-block countries after college are still vivid even after 30 years). I also agree with the books premise that a large inheritance really doesn't move the needle that much for most 60 or 70 year olds and is therefore a lost opportunity. Of course there are some people that money is a curse but there is a simple solution for them...a "Dole It Out" trust.
I am going to put some money to my adult children's retirement fund once I can assess my own retirement money. 10k each per year from age of 26 and let it snowball itself in their future. Much better than give them 1 million when they are 50-60 years old.
Thanks for another great video James!
James you nailed this thank you !
Thanks James.
Something to keep in mind. Should the need arise to place the giver into a nursing home. You need to be aware of the lookback period the government uses to determine medicaid eligibility. In some states, that period is the previous 5 years. It's just something to think about. Great video, by the way.
Thank you James, I enjoyed this and other videos as well. I have some podcasts I listen to where it feels I am somewhat spoken down to, but your even keeled delivery is purely educational and informative. You present well!
Outstanding information. Thank you.
Great video. Extremely useful information. Thanks for taking the time to make this content.
Great video - very clear, thanks
Thanks, James. Great tax info!
Great content, also good to Remember that the tax levels are set to change 2026
Great video on an important subject. I believe it's critical to understand that giving out large amounts of money to kids or grandkids may not always be helping them, but rather may be enabling them. Of course, this depends on the situation and people involved. Money can provide wonderful opportunities, but can also destroy people's lives when they don't have the character or self discipline to properly manage it.
The greatest gift I gave my kids was a fully paid college education. My next best gift will be substantial contributions to our grandkids’ 529 accounts. This ensures educational opportunities to the grandkids and allows our children to have more available to save towards their retirement.
Excellent
Me to a T ! Great explanation!!! I'm only 58 but already am thinking about it!! 😊
Good info here
I think that one of the mental hurdles with giving money is potential frustration and arguments that could arise if you cannot accept the money possibly being spent in a way that you dont intend. Gift $50k to help with a house deposit and they buy a car instead. It takes a strong mental attitude to accept that once the money is transferred it isnt yours anymore and you have no control over it.
Funding my daughter’s door dash habit is sort of annoying.
Do the stock holdings in retirement plans get distributed four ways when there are 4 beneficiaries upon the death of the principal? Or are all the holdings liquidated and the proceeds divided four ways? Thanks.
I’ve known about the annual gift limits of $18k and $36k. I didn’t know about the lifetime limit if I wanted to give more in any one year.
Hi James, I’ve been listening to you and Ari for quite a while now. This is an excellent video and relevant to a discussion on having with my parents.
I have a question regarding the situation in the proper beneficiary designation section. Why is it that the brokerage account is not taxable for the son but the IRA account is taxable? Thank you!
Because the money in the brokerage account is post tax and the assets get a step up in basis. However, money in a traditional (non Roth) IRA are pretax, and taxes must be paid we the money is taken out of the account unless the person/charity is tax exempt of course.
I assume a little of both. If I'm able to I'd rather see the positive effects of my gifts while I'm alive.
I agree. I kind of like the idea of gifting (what's it up to now, $19,000 a yr.?) w/ no taxes to either party.
Our children are our beneficiaries on my Roth IRA account and my wife's Roth IRA account. And we cut annual checks for Christmas gifts to them.
Be very careful of trusts. I've seen them get really twisted from the original desires of the people who made them. Better to give your wealth while you're alive
This seems like a morbid question. But can I gift my assets that have appreciated in value to my mother, and then when she passes I get them back with a stepped up cost basis?
Soooo many things can go wrong with this. Just pay your taxes.
pulling up a chair
And they'll be pulling up an orange jumpsuit.@@davidperry2725
40% estate tax is outrageous. Basically all our taxes are outrageous, but wow… and people say the wealthy don’t pay their fair share 😅😅
Hello, I am single and recently retired at age 58 , my assets are in long term individual stocks about 1.2 M and tax -deferred account 1.2 M. How to minimize tax for present and future income. (I have no loss in my portfolio) looking for help and recommendation Thank you.
At what point does an ordinary gift as a birthday gift become a reportable gift tax item? $500,$1000, $5000?
The 2024 annual gift tax exclusion is $18,000.
★★★★★ Two comments. First, talk to the beneficiaries. Advisors seldom point out what I think is obvious. Talk. Second, 90 year? Conservative investing. Ooh. Maybe. I know several ninety-year-olds who lived to 108. That's 18 more years. Inflation risk should always be considered.
I'm wondering if you live in one of the famous "Blue Zones" like that island in the Mediterranean that I watched on PBS. If you don't mind sharing the area...I'd like to move near you.
If one spouse with a brokerage account passed away, would the other spouse get the step up of cost for the holdings?
Yes, stocks / house / Picasso paintings are all treated the same
I believe yes as long as it is not in a Joint account (if joint only 50% would be step up.)
Yes they do
I think it depends if you are in a Community Property state or not.
And, if you start dripping it out now, maybe they'll bring the grandkids around more often and be more pleasant and respectful during the visits.
Too long sorry
Username regrettably checks out.
Your loss
Do you have a fan club? Can I join