Inheritance Question

[drawinout]

Ok, this is something I don't know anything about, and I really don't like to think about, but the time has come where my sister and I need to start educating ourselves. What kind of taxes are imposed on inheritance? We're not talking about millions on millions of dollars, but between my grandmother's property, my parents insurance policies, and their house, it won't be chump change. What's the best way to protect these assets? Hopefully some of you guys might be able to give me some advice.

Thanks

[RuddeDogg]

It depends on the state. The percentage amount you pay varies.

[sand flea]

Get a financial advisor. It'll be worth the money.

[Mark G]

Get a financial advisor. It'll be worth the money.

Agreed, an expert in estate planning can help immensely. I can provide links to the current IRS codes on specific topics, and give you some pointers, but am by no means a qualified expert. There are federal regs to consider, as well as state law. The Federal exemption on estate taxes, if I recall correctly was 1.2 million the last time I checked. States sometimes impose what is known as a separate "death" tax on estates, so it pays to find someone that is current on all the regs.

Assuming, some of the folks involved in the scenario are living, it pays to check into gift taxes, as they can give a certain amount away tax free each year (assuming they are willing) to avoid later estate taxes. The amounts are rather small, but the limit can be given to a number of dependents or individuals which can help spread out the funds and avoid more money going to Uncle Sam, which I am assuming is the ultimate goal.

Insurance in and of itself, was not subject to taxation, to the best of my recollection.

[Fishing_Feud]

If you have a "trustworthy" relationship with those mentioned it would be beneficial to begin a "redistribution of wealth" prior to death. Otherwise you will only be getting about half of what is rightfully yours. And I would imagine the tax will be rising in the very near future due to circumstances beyond my control. You do need to consult with a financial adviser about estate planning. Typically those fees are very reasonable and well worth it.

[drawinout]

Thanks for the advise guys. I have very healthy relationships with my family, and to the best of my knowledge, my parents have already hired the proper individuals to get the job done properly. I just wanted to some extra advice, as you can never be too safe. I know there has been a lot of talk about spreading the wealth recently, especially when it comes to inheritance.

[surfsidesativa]

Insurance in and of itself, was not subject to taxation, to the best of my recollection.

This is true right now. Ins and Annuity will avoid probate and go directly to beneficiary (ies) untaxed. There are actually some really complicated loopholes that you will most likely need an expert to help you with.

I posted on here before and I'll post again that Fixed Indexed Universal Life is my favorite investment/insurance vehicle going right now. These policies maximize inheritance while growing money at a rate that is tied to an external force (one of the markets) but isn't exposed to market loss. The policy accumulates cash value with compounded interest and loans and death claims can't be taxed since it's life insurance. Seriously ridiculous loophole. I'm trying to get as many clients as possible involved now before obama closes the loophole (existing policies will be grandfathered).

With the houses, you need to consider if you want to keep them for the long run.

Again, see an expert.

[RuddeDogg]

Get a financial advisor. It'll be worth the money.

Yep. One thing that I have learned especially in my family is that........
"Where there is a will,,,there's relatives" especially ones ya never knew ya had.

[mountainsalt]

I know a family near me that has some large property and investment holdings go together and incorporated, back when Clinton was in office if any of you remember those lovely taxing times. The Mother got all her kids together and divided some real property among them and placed the rest in the corporation and made them all vice-presidents or something like that.
I know my family has started doing something similar with my two remaining grandmothers while they are still with us and their minds are good. This plan was all both of my grandmothers ideas having both survived the depression they are a little financial prudent than their kids.
hope some of these ideas we have all presented help. You have till Jan. 1, and as the Duke said in the movie Cowboys "We're breaking daylight"

[fin&scale]

Living Trust....look into it