<p>(Thinking out loud here) What if you were to set up a corporation, transfer your assets into the corporation and name your family members as owners of the corporation, so upon your death, you would relinquish your shares of the corporation and other members would increase their shares.</p>
<p>I am reminded reading Post #34 about another issue whenever we are talking about gifting from elder parent to sandwich generation child: although moving money may be a good thing for elder parent’s planning, we have to be very mindful about who is the recipient. If the elder’s child is him/herself the parent of a college-aged kid (or younger kids who soon will be attending college), we have to consider how/if receiving the gifted funds may impact college financial aid eligibility. We don’t want to be in a position where we have helped one generation but have hurt another one, especially if the intention is that the gifted funds don’t get used until after the elder has passed away and no chance that elder will need the gift returned (“cured”). The goal is a plan that does good things for everyone. This is an example of where elder law attorneys might bring in other professionals (CPAs, financial aid counselors, etc) to help figure out wisest approach.</p>
<p>Grandparents (or others) can directly pay college tuition / room & board bills for their grandchildren without limitation and without incurring any gift tax or impacting their lifetime exemption, even if the amount is over the $14,000 per year. So rather than giving money to children or grandchildren and impacting potential finanical aid awards, it may be better for those with the resources to just pay part or all of the college expenses directly.</p>
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<p>I agree with this. One could delay until their spouse dies if one of them dies before their spouse. That’s about it. Setting up a coorporation may work if you can fudge the value of the cooperation. You tansfer $10M to set it up and when you make your family members owners call the value of the cooperation $5M. If you can do that, you would owe taxes only on $5M. I wouldn’t know how easy that is.</p>
<p>If they stick to cash value only, tax evasion becomes very hard. In the 80s, people exploited charitable giving inflating the value of their gifts to reduce tax. When Congress addressed that, they used real estate-depreciation, passive loss. That got fixed. Now everyone goes to Caymen island?</p>
<p>Yes, grandparents can pay college tuition and room and board without having to fill out gift tax forms, but if the student was getting financial aid then the grandparents’ contribution can affect (reduce) future financial aid. </p>
<p>This thread has started interleaving 2 different situations:</p>
<p>1) the situation where the grandparents are trying to impoverish themselves to qualify for Medicaid, and
2) the situation where the grandparents expect to leave a large estate and are trying to give away enough to avoid estate taxes.</p>
<p>These situations could possibly occur with the same set of grandparents, but that’s probably not common. Either way, an attorney specializing in elder law can help.</p>