Yes, I held on to a real estate partnership that would have added complexity to the ownership structure and disclaimed her home and liquid assets to my children. One benefit is that they have ten years to withdraw her IRA and it has grown considerably since her death. I was also fun for them to sit at the closing table when her house was sold. They haven’t touched a penny of their inheritance and refer to it as “Nana’s” money. They were so close to her and having it means more to them than just the financial considerations.
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Unfortunately, I won’t be able to “disclaim” this inheritance (it’s from a different country). Nor can I ask my parents to change it (both passed in 2021).
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How large of an inheritance are we talking about? The current exemption is over $27 million for a married couple ($13.6mm for an individual). Assuming the current exemptions sunset, it will still be around $14mm/$7mm. In the case of the poster who wants to give all of their inheritance from their parents to their kids, they could still gift over the annual exemption and not have any estate tax consequences as long as the total gifted that is over the annual exemption does not exceed the lifetime exemption. Also if we are talking an inherited estate of that size, they really should be consulting an estate planning expert.
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If you are purposely leaving someone out of your will, I don’t think you care how hurtful the wording is. Something already has been broken in the relationship. 
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Yeah it isn’t a myth. My grandmother came over from Mexico with my Great Grandparents. She married a bricklayer my grandfather. They had 7 kids. My Dad and Uncle ended up also being bricklayers. My parents had myself and my brother. Dad was adamant that his boys were going to college and not working construction. I didn’t really understand when I was young, but as I saw my Dad age I started to understand. That is a hard life doing it for 40+ years. He was a great golfer and taught my brother and I to play at a young age. The sad thing was he never/couldn’t play the last 10 or so years of his life. His body was shot. He died at 71 and looked like he was 88ish.
My Mom didn’t come from any money either. Even though she was salutatorian in HS she couldn’t go to college. She would have done so well in college.
Dad got drafted and had to go. He didn’t have an out of being in college or couldn’t pay a doctor to make up some BS medical issue.
So let me tell you they wanted a better life for their kids than they had. My wife came from a very similar family as we met in college. Probably why we clicked so well.
We both graduated and got good jobs, but we lived poor our first 6 or 7 years of marriage paying off our loans. So we wanted our kids to be able to graduate without loans.
Our kids know our families’ history. They know what everyone that came before them sacrificed so they could be where they are at.
Maybe if my parents and/or grandparents could go college then they wouldn’t have been as worried about making a better life for their kids, because that better life would just be normal.
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My dad was the first in his family to graduate from college. He went on to earn a PhD in his field. He and my mom married after her first year of college. She was a bookkeeper at a stockyard and he dug ditches and drove a bread truck in the summer to afford his tuition. His mother and stepfather cut him from their will. Why? He had taken my great-grandmother into our home to care for her in her last years. One memorable Christmas, the “elders” of the family got into an epic shouting match and that was the end of the relationship. My greatgrandmother left her estate to Dad and he shared it with us. Dad offered my grandmother items from the house, which she definitely took. When my grandmother died, Dad was pointedly left one dollar. He learned of her death when he received a check for…one dollar. My parents were frugal and careful with their money. I wish they would have spent more on themselves.
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My SisIL was single and was very kind to help contribute towards our kids educational expenses, when funds were very tight and both attended private HS and then private U. It meant a great deal and she had no kids nor spouse.
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I told my Dad that I wouldn’t need any of his money and to leave my share to my homeless, severely alcoholic brother because he had no source of income. He instead designated my share to be given to my daughters. My brother has since passed away from complications of his alcoholism, so I now no longer feel weird about how my Dad chose to structure his will. Not that I didn’t feel he has a right to do whatever he wants with his money, just that I won’t feel bad that my already financially secure children would benefit from something that would have possibly gotten my brother off of the streets at least. My Dad is still hanging in there, thank God, but he spends very little these days, and he feels pride in being able to leave some money to my other brother, my kids, and my sister’s kids. Personally, I wish he was in good health and could spend the rest of his estate traveling and having fun.
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Or sometimes people name those heirs to receive something like $1.
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My dad chose not to leave any of his very small estate to my niece. My brother passed away, so she would have received his share. She was angry when my brother, the executor, reimbursed legitimate expenses from her dad’s estate - she felt that he had no right to give away “her” money. My dad was concerned that her attitude would be an issue when settling his estate, and it wasn’t going to be enough money to justify that happening. He rewrote his will to state that it would be equally shared by his four surviving children (and named each of us).
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I’m friends with a family where the grandparents are very wealthy (VERY) but the parents of the grandchildren are middle class, and I think middle class because the grandparents can take on so many of the expenses. The grandparents not only pay for college but also PreK-12 at parochial school (and really much more than that as the grandfather set up the computer lab at our school, funded a scholarship, paid for improvements so all the kids benefited, including mine). The parents didn’t have to save for college so could afford to fund their retirement accounts, pay a little extra for ECs, and support their kids in a lot of other ways. The parents worked hard, no question, but the stress of paying for tuition for 3 kids (both families had 3 kids in the school) was lifted. All the kids got to pick their high schools without worrying about the cost (at the time, catholic high schools ranged from about $7000 to $20k per year), and any college they wanted to attend.
Really a wonderful gift.
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Most people think it’s always 59 1/2, see Rule of 55.
"If you turn 55 (or older) during the calendar year you lose or leave your job, you can begin taking distributions from your 401(k) without paying the early withdrawal penalty. "
“You can only take those penalty-free early 401(k) withdrawals from the plan you were contributing to at the time you separated from service. The money in other retirement plans must remain in place until you reach age 59 1/2 if you want to avoid the penalty.”
There’s also 72(t) for IRAs but 72(t) is not as simple as Rule of 55.
Nothing I post should be considered tax, legal, or financial advice. Please consult with your own financial professional.
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I am sure most people here know this, but just in case…… you can gift your child more than the $18,000 yearly limit, and you and your child won’t have to pay taxes on this money. But you do need to note it in your tax return, so that that amount can count towards the lifetime gift limit. I think it is form 709, but I could be wrong.
We will be gifting DD half of the value of the lad of our shared property, and DS the equivalent cash amount. Then we are done, because we will have gifted our kids their private college educations, and a few healthy chunk sums when we have received inheritances. We live a modest lifestyle, and have modest income, especially compared to most folks on this forum, but we wanted to do this gifting now, to help both DD and DS obtain houses.
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The form is NOT part of your tax return. You do need to file it if you exceed the $18,000 limit. If you are a married couple, you can each give $18,000 a year.
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Thanks for the clarification. Is that form submitted at the same time as your tax return and as part of your tax return? We haven’t ever gifted over the 18k limit before, but we are fixing to soon….
It is not sent with your tax return. It’s sent separately. I think the timing is the same…or close.
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We did discuss this with our trust attorney. (In a post above I noted we’re updating our really old trust). We’ve made large gifts, and it all gets mathed out at the end of the (our) day. It’s been memorialized, not sure on the details. Unlikely to be an issue.
I didn’t know about that gift limit - thanks for sharing!
I would echo the value of a trust. I have three siblings. I have been pretty successful financially and have two siblings who are prepared for retirement (one retired who with her H lived with in her means, saved, and does not spend a ton and are fine financially and the other is younger but with a good job and a colorectal surgeon husband) and a brother whose financial decision-making is uncommonly bad. He has a heart of gold but seems to have a mental age of about 13 and if asked to make a financial choice, he will always make the wrong one.
I asked my siblings if they would mind if my brother got a disproportionate share of my mother’s estate and they were happy without reservation. I then asked my mother to rewrite her will, putting his expanded share in a trust (with my sister as a trustee). Both my brother and my mom were mad at me, but it did get done. He can only get a certain amount per year he and my sister would have to decide to go beyond that. It means he can’t go out and buy a $150K with the belief that it will be a good investment.
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Has anyone updated their trusts - if nothing has changed.
We got the living trusts when the kids were born.
Nothing has changed in regards to who gets what - other than where we live and I suppose who gets the kids - that are both adults now.
Is there a - it’s good to have them updated every X years regardless thought?