My mom is on hospice with possibly a few months to live. My dad is 83 and in decent health.
Washington state has an estate tax with an exemption of 2.193million. The inflation index tied to this law no longer exists, so there is no hope of the exemption increasing unless the law is changed. We can't count on the exemption going up anytime soon.
My parents own real estate assets over the threshold, so even if I can convince my dad to gift all his cash/retirement accounts, his estate will still be stuck paying a tax. Currently the estate tax owed if they both died tomorrow would be over $246k. Understandably, he doesn't want his estate to pay that, but he seems to be having a hard time gifting any money also. There are 7 of us kids with the estate being split equally. I propose that he start with the annual gift amount of $18k per person for 2024, $36k while my mom still lives, and then $38k to each of us in January for 2025. He's considering it.
Currently my mom and dad have a joint revocable trust. As I'll be the trustee after my parents are gone, I know a bit about that. With no one being a minor or handicapped, it will basically be a matter of dividing up all the accounts equally, and selling off the real estate and dividing that money equally.
I'm wondering now if the better course of action would be to have my parents set up a irrevocable trust for the real estate? There are 4 parcels of bare land, my dad's current home (my mom is in a care facility), and a rental home creating $24k annually in rental income. I also understand that trusts pay a higher tax rate, so I'm not really sure what is the best course of action. And I would appreciate any insight anyone has into a situation like this. I want to keep things as simple as possible to keep current and future work for me (as trustee/executor of estate) to a minimum.
I currently assist with all financial matters and money movement, pay taxes, and property tax. I'm not sure how an irrevocable trust would impact those duties. And what situation ends up paying the least amount in taxes?
Also, I understand the value of the real estate would not get a step-up in basis when last parent dies if placed in irrevocable trust. I'm not sure if that's a major consideration in this case? 5 of the holdings were transferred from a business within the last couple of years and received a step-up at that time.
Washington state has an estate tax with an exemption of 2.193million. The inflation index tied to this law no longer exists, so there is no hope of the exemption increasing unless the law is changed. We can't count on the exemption going up anytime soon.
My parents own real estate assets over the threshold, so even if I can convince my dad to gift all his cash/retirement accounts, his estate will still be stuck paying a tax. Currently the estate tax owed if they both died tomorrow would be over $246k. Understandably, he doesn't want his estate to pay that, but he seems to be having a hard time gifting any money also. There are 7 of us kids with the estate being split equally. I propose that he start with the annual gift amount of $18k per person for 2024, $36k while my mom still lives, and then $38k to each of us in January for 2025. He's considering it.
Currently my mom and dad have a joint revocable trust. As I'll be the trustee after my parents are gone, I know a bit about that. With no one being a minor or handicapped, it will basically be a matter of dividing up all the accounts equally, and selling off the real estate and dividing that money equally.
I'm wondering now if the better course of action would be to have my parents set up a irrevocable trust for the real estate? There are 4 parcels of bare land, my dad's current home (my mom is in a care facility), and a rental home creating $24k annually in rental income. I also understand that trusts pay a higher tax rate, so I'm not really sure what is the best course of action. And I would appreciate any insight anyone has into a situation like this. I want to keep things as simple as possible to keep current and future work for me (as trustee/executor of estate) to a minimum.
I currently assist with all financial matters and money movement, pay taxes, and property tax. I'm not sure how an irrevocable trust would impact those duties. And what situation ends up paying the least amount in taxes?
Also, I understand the value of the real estate would not get a step-up in basis when last parent dies if placed in irrevocable trust. I'm not sure if that's a major consideration in this case? 5 of the holdings were transferred from a business within the last couple of years and received a step-up at that time.
Statistics: Posted by iln1980 — Fri Dec 06, 2024 11:06 pm — Replies 2 — Views 301