<p>“It never keeps still long enough to pin down.”</p>
<p>Remember when the kiddie tax expired at age 17? No more … it’s 24 for dependent students. So much for the concept of investing in the child’s name with the intention of “selling off and spending down” during the college years.</p>
<p>The point is, things change. And some strategic choices a family makes can have a significant effect on net worth … whatever way one choses to define it.</p>
<p>^^ this year and next are good years to think about resetting the cost basis of appreciated assets as part of estate planning. It’s especially worth doing if the assets are owned by people who are now in a lower tax bracket, as the long term capital gain tax is 0% if you are in the 15% tax bracket or below in 2011 and 2012.</p>
<p>[0%</a> Capital Gains Tax Rate for 2011 and 2012 - The Finance Buff](<a href=“http://thefinancebuff.com/0-capital-gains-tax-rate-for-2011-and-2012.html]0%”>http://thefinancebuff.com/0-capital-gains-tax-rate-for-2011-and-2012.html)</p>
<p>Before 2010, inherited assets did get an automatic step up in basis to date of death value. And, for most assets inherited in 2010, that was still true. But it’s complicated. The universal step-up died with the estate tax on December 31, 2009. For assets inherited in 2010, a modified carry-over basis rule is in force. Carryover basis means the person who inherits assets also inherits the deceased owner’s basis. But, the executor of the estate has the right step up the basis to date of death value to wipe out up to $1.3 million of appreciation (plus an extra $3 million step up for a surviving husband or wife).</p>
<p>In 2011 and 2012 assets receive a step-up (or step-down) in cost basis to the market value at either the date of death or the alternate valuation date, depending on which date is selected by the executor.</p>
<p>In 2013, the rules revert back to those in effect in 2002. I can’t find definitive rules regarding step-up in 2013, so perhaps I misspoke in my previous post regarding the cost basis.</p>
<p>jym, I am very surprised that your DH had Japanese citizenship if he isn’t ethnic Japanese. Japan is a country where they don’t automatically grant citizenship if you are not ethnic Japanese even though several generations had been born there. You may have residency, but not citizenship.</p>
<p>I concur. It is impossibly hard to get Japanese citizenship unless you were actually born there.</p>
<p>
</p>
<p>I know a ton of families who have citizenship and residency in both HK and Canada. Sweet deal because they get all the perks of the social safety net- education, healthcare etc- in Canada, but typically dad earns in HK (where the income tax is very low and he need not pay any Canadian income tax).</p>
<p>So BC, you are one of those who have off shore accounts.</p>
<p>My d was born in Japan and was NOT allowed to be a Japanese citizen because her parents were not Japanese citizens. Very closed sense of ethnicity being enforced…</p>
<p>^It’s not that unusual, Germany has the same rules.</p>
<br>
<br>
<p>Yup. But it’s not a big deal - except you have to file an FBAR every year and you have to do currency conversions at tax time. I could just drive up to Canada and open up a savings account with a few hundred - that would be an offshore account.</p>
<p>cbreeze and jsanche,</p>
<p>He WAS born there. Dad was military. He was born and raised there, so perhaps had residency too. What he told me (he isn’t here right now so this is from memory) is that he had citizenship and gave up the Japanese one at 18.</p>
<p>DH just called- He said he gave up (relinquished) the opportunity to seek out the right to pursue the citizenship (if that makes sense). Thats not what he told me a gazillion years ago when we were married, but thats what he says now!</p>
<p>^^^Exactly the same deal with my nephew. Born in Japan, Dad was military. At age 18 he gave up his Japanese citizenship.</p>
<p>Because of the time difference, I’ve always been confused about his birthday. I learned on the 21st in the States that he was born on the 22nd in Japan. Wha . . . ?</p>
<p>jym, if your DH’s mother is a Japanese citizen, then he could have have the right to Japanese citizenship.</p>
<p>I just had lunch with some visiting relatives from abroad. My cousin’s husband is an ethnic Chinese born in Japan and even though he was born in Japan, he holds a Chinese passport (from Taiwan). Shortly after they were married in CA, they went to live in Japan. They have two sons, one of whom was born in the US and another born in Japan. Both boys have US citizenship since one was born here and the other one got it through his mother (my cousin, a US citizen).</p>
<p>Older son married a Japanese woman and they are now living in Berlin, Germany. They just had a baby who was born in Berlin. Now, the baby couldn’t be a German citizen nor a US citizen because his father, who is a US born citizen had never lived in this country for more than a year. I had never heard of this distinction before. So the baby gets a Japanese passport because of his mother. My cousin’s son speaks 4 languages fluently, Chinese, Japanese, English and German. Truly, an international family.</p>
<p>I don’t know how you know when you are a millionaire but I know I’m not anywhere close. Being 28 and all. ;)</p>
<p>I have no clue what my 401k will look like in 40 years and I don’t know what my pension will look like in 40 years either. I do know that if I were to leave my job right now, and start to collect my penion at 65, I would get either 148 per month or a lump sum of 23k. If I work there till 65 I’m projected to 2600 per month or 420k lump sum. Any other end dates in between obviously fall somewhere in the middle. It alomst seems like you could take that lump sum and invest it and make most of the projected monthly amount back on interest.</p>
<p>My house would probably sell for around 180-200k at the moment and I owe about 120k on it. Obviously that all changes from day to day. Is that 60-80k of networth?</p>
<p>fendergirl - When I was your age, ahem, back before the Age of Steam, I kept exacting records of income, expenses, and assets. I look back now and laugh. (Example: Tank of gas $3.45) The sums were meaningless. But the positive mindset that “keeping track helps you keep on track” has been an essential element of our family’s financial successes.</p>
<p>Yeah who knows. By the time I’m retired gas will probably be 100 dollars a tank at this rate. it’s already 3-4x more then it was 12 years ago. ;)</p>
<p>I only keep separate accounts in three countries (UK, US, Spain) because I travel a great deal. If I ever need to stay longer, then I can just access my local accounts. It’s a real PITA when you’re staying in place A and you’re doing your banking all the way across the Atlantic.</p>
<p>
</p>
<p>Maybe, maybe not. The thing about a pension plan is that it is guaranteed income. The company sponsoring it takes the investment risk. In other words, if overall the pension fund doesn’t earn as much as was planned, the company has to put more $$$ into it so that the benefits everyone is supposed to get can be paid. </p>
<p>In addition, at age 65 (or whenever Full Retirement Age is), you’ll have the opportunity to select a Single Life Annnuity, which means you will get that income as long as you live. That eliminates the risk that you’ll live a long time and run out of money.</p>
<p>Don’t be so quick to take your pension money as a lump sum. You can really really screw yourself by losing it. In my book, something guaranteed is worth a great deal.</p>
<p>“Don’t be so quick to take your pension money as a lump sum. You can really really screw yourself by losing it.”</p>
<p>Yes, taking you pension as a lump sum can cost you a lot … but it does provide a nice Net Worth boost! (Just one more reason to NOT obsess over your Net Worth number.)</p>
<p>believe me I’m not even close to thinking about retirement, I just know when I go into my pension benefits it gives me the figures both ways.</p>