<p>jym, FDIL’s parents aren’t paying for any of the wedding. We’re more well off than they are, but S and FDIL see the wedding as their own financial responsibility. I thing they also like making all the decisions themselves so they can get the wedding they want. Her family is more creative and crafty than we are, so they may be contributing to the wedding in other ways, but I don’t know for sure or how. We offered to pay for the rehearsal dinner, and S was grateful that we made the offer. </p>
<p>I had always assumed that if we wrote a check out of a joint account that the gift would count as being from both of us. Interesting to hear that it might be safer to write 2 checks if the amount is greater than $14,000 (still not sure exactly how much we intend to gift anyway).</p>
<p>^ Only one state, Connecticut, has gift tax. Only 19 states and D.C. have estate or inheritance taxes, and the top rates are much less than the top Federal rate. Here’s a nice chart:</p>
The Feds don’t track it. If you get caught though, the taxes and penalties would be pretty high. I suspect most people have little knowledge about this, but then most people don’t have enough money to be making $14,000 gifts.</p>
<p>I’ve heard stories about IRS agents ■■■■■■■■ Registries of Deeds looking for property transfers with very low prices or with the same last name for buyer and seller. So if your parent transfers their house to you or sells it to you for $100, to get it out of reach of Medicare for example, and no gift tax form was filed - blammo.</p>
<p>So, say you decide to give your lucky kids $100K each (fat chance), just as a gift. You file the proper form, and it’s my understanding that there is no tax liability for any state or federal tax from this. All it does is reduce the value of your estate to where it starts to become taxed upon your death. Meaning if the federal estate tax starts at 5 million, if you have given away 1 million over your lifetime (over the annual amount allowed to be excluded), your estate will be taxed starting at 4 million. If that makes any sense. Is that correct?</p>
<p>Had never seen John Oliver before, but he was quite accurate and funny with a sting. It has never made much sense to me that there aren’t more efforts to reform the huge amount we are able to gift and pass on to our heirs tax free. </p>
<p>I am glad our state adopted the federal exemptions. It makes my life easier. </p>
<p>I guess the dream that we will all be rich and be able to pass on our wealth is imbedded into our culture?</p>
<p>Except my state, flat rate after a miniscule exemption. I used to think California is an expensive state to retire to. I was wrong. They don’t have an inheritance tax.</p>
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<p>I am actually for higher estate taxes not to create aristocrats. I think it deepens the inequality. </p>
<p>@Igloo, if you are in Maryland (which seems to be the only state with a flat inheritance tax rate) spouses and descendents are exempt from inheritance tax, according to this:</p>
<p>So I will drag you all back to the experience of retirement. Today H got a large bill from Medicare totally unexpected because the person at his work who was suppose to explain how it works failed to give the piece of info that it is based on his last two years of salary. Now he has to go to Social Security and file an appeal and, hopefully, get reimbused at least part as his salary for 2014 will be less. It will be two years from his reitrement date utill the “real” amount will be billed.</p>
<p>I am a micromanager of our monthly expenses and cash flow. I had been warned from a retired friend that it takes about 6 moonths to get the cash/flow and a new system in place. Withour annuity there was a “hump” month or delay in any funds from the resource. It only turned out to be 2 weeks but the money needed those two weeks came out of liquid savings. I would suggest now that having a good $15-20,000 as a known backup for the first year be in place. Hopefully this is high but then again manybe not.</p>
<p>Yes, having an emergency fund–at least a few months of expenses–gave us great peace of mind, as we weren’t sure that H’s pension would pay out as planned. It was a good thing we had some cash on hand, as his last day of work was 12/31 and his first pension check was 2/1! Fortunately, he did get a payroll check after his last day of work, covering time he had worked, added to our liquid savings we were fine. Some of his colleagues had a tougher time, especially when there were glitches with pension payments, causing delays in pension payments.</p>
<p>As it was, the pension payments took about 6 months to be recalculated correctly, even though the estimate he had received prior to retirement had been correct.</p>
<p>Medicare DOES adjust premium payments, based on reported salary. H’s payment was higher because for 6 months, he was getting a pension AND working at his former workplace, training people that weren’t made available to him previously. His Medicare premium was adjusted upward because of that; hopefully they will also adjust downward.</p>
FYI … the parents can give $56,000 to the couple without filing any gift tracking forms. Each parent can give $14,000 to both their child and their intended. If this is done both in, for example, late December and again in early January … this is $112,000. Punch line, there certainly are strategies to transfer A LOT of money without tax or tax reporting consequences.</p>
<p>I like this thread. It covers many topics that DH and I discuss, but of course that brings no outside ideas to the conversation. We sometimes discuss the topics in generalized terms with our 50-sometihng friends, but we don’t discuss actual financial details and examples with them.</p>
<p>Quite frankly, I had given very little thought to the “estate” and focused more what our needs would be if we hung on for 30 years each. Assuming we’re nowhere near the 10 mil mark, what sort of planning should we do? I need to perhaps research things like how IRAs and 401(k) are treated when they go to kids, MRD rules, and maybe come up with a guide on what assets to liquidate first, and what to hang on to the longest. </p>
<p>One thing I haven’t figured out yet - do I take SS at 62 and preserve my IRA until I am 70, or should I start taking money from my IRA at 62 and delay SS until I am 70?</p>