Posted on 12/23/2006 9:10:47 PM PST by gov_bean_ counter
What would be the best estate strategy for an 80 year old widow with assets valued at approaching 3 million. All assets are in her name and nothing has been sheltered. Almost two million of that is in property that has been held for longer than 30 years. One is a rental building the other is a beachhouse.
It is a good bet she will outlive the sunset of the existing laws. The individual is in good health, managing glaucoma, high blood pressure and high cholesterol with medication. History of diabeties in the family.
Is gradual reduction of the value of her holdings a viable strategy given the uncertainty surrounding the current estate tax laws a viable strategy? The estate planners I have talked to and the information I have read indicates that this should always be part of a stragety for the regular guy who swerved into property that takes a huge leap in value as hers has. (Unlike the Kennedy types who don't really own anything. Trust babies, don't you know.
Of immediate concern is the proposal to sell the recreational property and repurchase property of equal value in a like kind exchange. Seems to me that is just kicking the capital gains tax can down the street to an unknown future. What do you folks think?
She should write a new will leaving it all to me.
With all due respect, this is serious business.
WAY not enough information. What are the lady's wishes? Any children? Grandchildren? Etc.
see private email
Charitable remainder trust might be an option. She could gift her property to a charity, retain income from it for life and no estate tax on it when she dies. If she has some relatives who object to her giving away their inheritance, she could buy life insurance with the tax savings to pay them the amount they would receive from an inheritance.
If she wants to benefit heirs she can gift them money and or an interest in the real estate. She could also set up a family partnership, move the property into the partnership and gift partnership shares. With the partnership the fair market value of the property is diminished for estate tax valuation purposes because of the ownership issues.
With all due respect, you should go see an attorney in your jurisdiction.
Any advice you get here is worth what it cost you.
Zip.
Don't go cheap, get a good lawyer.
FWIW, I DGARA about her wishes. This person kept her children in an abusive situation and simply outlived the abuser. Got the bling.
I am looking for some insight into the general trend of estate planning in the current environment.
Come now, if this is truly serious business how can you think of soliciting financial advice from a group of strangers taking part in an online forum? If you're really serious, of course you must seek the advice of a credentialled financial planner, tax attorney, or other well-regarded advisor with a demonstrable track record. Otherwise you must expect a bit of ribbing from your friends here on FR.
Check your state laws. While current federal law exempts the first 2.5 mil from tax, Ohio does not and starts taxing at 7% after 180k.
Anything with a large cap gain should be held until death because you get a step up in basis.
Anything with a capital loss should be sold now, because you lose the deduction when you die.
Anything with a small gain or breakeven should be gifted up to 1 million to whoever she wants.
With $3 million in assets, maybe she can marry me, and I'll take care to be sure they're no assets left after her burial!
You have a potentially very sensitive situation. It is possible to create an estate plan that will be zero estate taxes but it is not simple. The only valid recommendation is to hire the appropriate professional and be willing to pay their fees - its a lot cheaper than the estate tax will be.
My recommendation (and I am in just this business) is to hire a fee-only (not fee based) Certified Financial Planner who is experienced with High Net Worth Estate Planning. Avoid any professional who has any conflict of interest created by other forms of revenue like insurance commissions or referral fees, etc. With nearly 20 years of experience with these kinds of situations, I don't trust this to attorneys or CPAs alone - they have too narrow a focus. The only professionals trained broadly enough is a CFP who focuses on estate planning. You may end up needing an attorney, a CPA and an insurance agent as well before it is all over, but your planning should be orchestrated by a fiduciary who has a broad view and sufficient understanding of all the areas to be able to coordinate the planning process.
If you don't know where to find this kind of CFP, contact the National Association of Personal Financial Advisors (NAPA). www.napfa.org I believe. If I am wrong about the web address just google napfa.
If you're paying less than 1% of assets to the attorney, you will probably take a major haircut, or have the whole plan fall apart.
Most estate planning attys are incompetent. Even the big-time "good" ones.
Freepmail me if you want tips on a referral that has some hope of actually doing the job right.
save to follow
1. Move to Switzerland
2. Ask Marc Rich how he did it
3. Do it
Does she have heirs? I would do the exchange for income producing property and do a LLC at that time. I am not a estate planner and have never played one on TV or stayed in a Holiday Inn last night...
My mother is almost an exact carbon copy of yours. Unfortunately, she doesn't take my advice, but:
I would look at ETFs worldwide to spread some of the global risk. Real estate can be a good hedge normally, but her cap rate should be over 7%, so you need to check that. CDs at 5.25, not great, but solid. If you are worried about the inheritance (and who isn't) have her start giving it away now. One good dodge is to set up college funds for grandchildren, there's some tax free programs for that.
Diversify, diversify, diversify. get some of it out of the country now as well. Hopefully we can take some of my advice ourselves.
Yes and no.
Have read some of the best input on life and death issues ever from dear precious FREEPERS who are experts in their field and/or who've been there in such situations themselves.
I have enormous respect for collective input from such caring Conservatives.
AND
there is merit at least in checking out some good atnys locally. But generally, I'm sorry to say, far too much typical greedy self-serving shysterism has been the lot of my poor parents with local atnys over several decades.
"FWIW, I DGARA about her wishes. This person kept her children in an abusive situation and simply outlived the abuser. Got the bling."
Man, you sure we aren't brothers?
Have her give it to the grandchildren in trusts, that will split it up. She probably only needs about $1.5 to keep comfortable, tell her the rest is just going to go to the government, so she might as well get rid of it now. Isn't like the family will let her starve if she goes through her $1.5
Charitable remainder trust might be an option. She could gift her property to a charity.
The CRT could also name a family foundation as the beni. She could set up her own family foundation.
I do this type of thing with my father in law.
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