<p>My daughters have some money that comes to them annually from distribution account as being named partial beneficiaries in my late mother’s IRA, now of course there are only 2 of them so maybe not the easiest approach but it is an annual distribution until the amount of the funds in the IRA are distributed. It is income to them for tax purposes.</p>
<p>Again, that would be part of the estate. The idea is to gift it to them now so that it reduces the estate. Inheriting in any way defeats the purpose.</p>
<p>Again…discuss this with your lawyer. Seems to me, a trust with the amounts in it for all should be able to be set up…one trust…not 15. The provisions for the distribution of the trust monies are written into the trust. </p>
<p>And again, they were trying to avoid setting up a trust. I already suggested that. But it’s looking like that’s the only option unless the Treasury Direct works. They were looking for something really simple like buying bonds that they put aside and the kids would get later. It appears that there is nothing left like that. They wanted to be able to do it themselves. No lawyers, no trust, no going online. They are in their late 80s. I could help them with it, but they wanted to go to their bank, buy bonds and put them away. I don’t know how else to say it.</p>
<p>I was not clear in that I implied the treasury direct account for the giftee needs to be set up immediately. THAT it does NOT!<br>
I set up the treasury direct account for Mom, bought a bond < $10,000 for her great grandson and it sat in the gift box until my niece was able to get his account set up. All I needed was his social security # which I got from my brother. You control when the bond moves from your gift box to the recipient. Doesn’t help much if your parents want to do more than $10,000 per person, but maybe there is something in there that I didn’t look for. I was looking at $100 bonds at the time. But it worked and was simple in the end. … and you do the on-line stuff.</p>
<p>And I did read, 3bm103, that stock brokers can still sell the bonds. Have they asked there? I get that the old bonds were so nice because the interest wasn’t tracked until they were cashed. I don’t know how the treasury direct does it.</p>
<p>We’re talking thousands of dollars obviously. Go to someone who has a clue. An estate planner with real options. Please.
All the “safe” stuff may be detrimental–it may be better for quite a few to be able to invest in the market and grow their money.</p>
<p>If these folks have these huge resources, they are being penny wise and pound foolish by NOT contacting a professional with expertise in this type of estate planning.</p>
<p>It seems to me that an UGMA account for the grandkids who are minors would partially satisfy some of the objectives. It has some drawbacks, as, upon reaching the age of majority, the minor has access and control over the account. And since the grandkids are likely different ages, it creates a problem of “rolling disclosure” as the older grandkids find out about it. </p>
<p>I suppose you could set up a trust for each grandchild. As long as the trust didn’t have current income, it wouldn’t have to distribute any income to avoid the higher tax rate on trusts. You could gift the max to each trust and have each trust buy the lower denomination Berkshire Hathaway stock, which pays no dividend and doesn’t intend to. That way there’d be no taxable income along the way to force a disclosure to the parents or grandkids, I think. Other non divided paying stocks could work too, as long as you didn’t have to sell them and trigger a taxable event. Berkshire would be my choice for such an entity since its fairly well diversified, not leveraged, and run by logical people. </p>
<p>I think the key point is that the trust can have income (unless you don’t care about paying at the trust rate), or it will end up being disclosed, I think, to the beneficiary. So non-dividend paying stock investments seem to me to be the right thing to do. </p>
<p>They could open joint safe deposit boxes in each of the grandkid’s names (as cosigners) but retain the keys themselves to restrict access. Then each year put $28,000 cash in each box. Interest rates are low and inflation doesn’t pose much risk over the near future. They wouldn’t want to put the money in anything that might result in a tax consequence for the benefactors if it is secret. When the time comes to withdraw the cash it could be taken to a teller for wire transfer to another institution. Drawback is any fee associated with the safe deposit boxes. Wonder if they could just have one box with a large envelope for each grandchild inside? With proper documentation you could prove the timing and amount of each cash gift to each child, even though they would receive it all at once. </p>
<p>This definitely sounds like something that should be in a trust. It doesn’t need to cost a lot. My mom (also a penny-pincher) just set a similar situation up, albeit only for 2 grandkids, and she paid something like 500 or 600 dollars for one time attorney fees. If a volunteer family member (you?) is willing to be the executor of the trust, there shouldn’t be additional costs. </p>
<p>If they want easy–gift each kid–write a check and everybody is on their own. Reduce their estate. They’re in their 80’s.
That’s the fair way. Easy. No muss, no fuss. As usual, it’s a one time gift with no guarantee of a next year. </p>
<p>Secrets aren’t really allowed in the IRS laws. And how would you ever keep them in the family? Keeping a trust for people over 30 isn’t great. Putting it aside without giving the actual funds to them is not a gift–it becomes inheritance subject to taxes if not done correctly… Go see an ESTATE PLANNING lawyer. . Accompany them to the appointment if possible–you’ll have questions that they probably wouldn’t ask. </p>
<p>And did I read this right?
You have all the SS numbers to set up accounts? And you consider that an option? I hope your answer would be no. You know how mad I’d be if an account was set up in my name without my knowledge using info that was privy only to my “trusted” accountant? No way. You’re name is mud on the ethical scale. </p>
<p>We bought a bond as a gift a couple of years ago, it is still sitting in the gift box at Treasury Direct. I find the website, interface and logic to be incredibly irritating in dealing with the bonds. So, you probably could buy bonds and leave them in the gift box, BUT if you are doing this for tax purposes, then you need to make sure to have “completed” gifts., If the IRS deems the gift not to be a real and complete gift, then they can void the whole thing.</p>
<p>Sounds like you are dealing with old school thinking yet significant estate values. It seems to me it is perhaps best for you to come up with 1-2 solutions and then suggest that if it is going to work a legal advisor must help choose. Can you couch it in terms of us against the IRS?</p>
<p>^^^Agree with Somemom. I’m willing to bet you might successfully persuade a penny pincher to spend money on a lawyer if you tell him/her that estate taxes can be as much as 55%. That should leave them faint of heart. Then tell them they need legal advice to avoid this. Why not do some homework for them and get the names of a couple of estate attorneys they can interview. Take your folks to talk to these attorneys. A good attorney should be able to persuade them of the benefits of a trust. </p>
<p>In our town, banks gave estate attorneys whom they recommend at low rates for their I referred clients, if your folks aren’t happy with their current estate atty. I’d probabky suggest they start with current atty, as he already should have a decent idea about their assets and estate. </p>
<p>I think it’s more than a little awkward for a family member to have anything to do with the set up of this money transfer arrangement…especially since there seem to be some differences between the values of the parents of the recipients (The siblings of the OP).</p>
<p>I would advise your parents to get a third party to set all of this up…and keep you in the dark too.</p>
<p>As a sibling, I would be hopping mad if one of my siblings was party to an arrangement that was a secret to me. </p>
<p>And they will find out.</p>
<p>Get a third party to deal,with all of this. If the grandparents really want to be fair, that is the only way to go…regardless of the cost.</p>
<p>Good thought Thumper.</p>
<p>Agree with @Thumper that you should not be involved in any secrets from your sibs with folks’ assets. Could cause hard feelings. </p>
<p>Thanks for the advice on our family’s relationship but I can’t imagine my siblings being upset because I helped our parents gift money to their children. I’ve known them a long time now. They aren’t like that. I also firmly believe that my parents have a right to do what they want with their money without my unwanted criticism. What’s “awkward” in one family would work just fine in another. And of course they will find out. But getting upset because my parents left money to their children? That would be pretty darn childish.</p>
<p>Oh, no, not upset that the money was left to their kids; upset that you were privy to details of parents’ financial information, or that your were consulted and they weren’t; upset that they think their input would have directed a different outcome.</p>
<p>They know I’m privy to all my parents financial details and they are okay with it. I am also privy to theirs as I do their tax returns. I don’t share their information with anybody else and I don’t share that of my parents. They are very aware of the details of my parents will in that I am their trustee, I do their taxes and my parents consult me when making financial decisions. They’ve been okay with that for the past 30 years. Can’t imagine them getting upset now. But I will certainly keep all these concerns in mind.</p>