This is not at all clear. Incomes are about the same, and the lower household wealth of millennials compared to earlier generations is significantly affected by millennials delaying household formation (far fewer are married than prior generations at the same age). Since it is household (not individual) wealth being measured, marriage rates impact it tremendously. The Pew report on generation’s income, wealth etc. in 2018 is worth reading.
The data on the percentage of millionaires who inherited their wealth – or inherited anything at all – is worth looking at. The most recent data I’ve seen is that 79% of millionaires currently in the U.S. have not inherited anything.
My parents died in 1988. The federal exemption then was $600,000. And, I had to take IRAs in five years. Which is what the rules are back to now.
True. Just had this discussion with our financial advisor in trying to determine if my MiL should take her RND for 2020 or skip it since Cares act allowed skipping it for 2020. I brought up that at her age she might be better off taking the distribution now (2020) while being in a lower tax bracket than the extra year buys us if she dies and we have to deal with the 5 year beneficiary rule for the IRA. We ultimately decided to cash half of the RMD out in cash and leave it in the IRA to minimize the market risk since it was a wild ride last year and avoid and tax on the money in 2020 with any distribution after I did some calculations but there are so many factors to consider that it makes one realize how many people really don’t know how to deal with these things and are probably taken advantage of regularly.
@maya54 Well, my kids are pretty young so I can’t say for sure. They have better work ethics than I do ( and I worked pretty hard over my life). I was thinking more along the lines of them planning on larger stuff. Guess I’d have to answer that question after my kids hit the age of 30+ ( We did put 30 in as the age they would inherit anything in case of our untimely demise).
Life happens so who knows. And sometimes people can do everything “right” and still get caught having a debilitating issue or something else that pulls them off track.
Plus, I want them to know we are all set. But I don’t want them to know exactly how set we are. Might change as we age.
AhhhIf you’re kids are young, that’s fair. I’d say by their late teens I knew that this wasn’t going to be an issue for mine.
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Federal estate/inheritance tax is non existent for over 99% of estates: "The vast majority of estates — 99.9% — do not pay federal estate taxes . While the top estate tax rate is 40%, the average tax rate paid is just 17%. The estate tax is only paid on assets greater than $5.3 million per individual ($10.6 million per couple)."
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For 2021 the federal estate tax is only paid on estates with assets greater than $11.7 per person or $23.4m per couple. It was $11.58m/person in 2020. Not sure where you got $5.3m/$10.6 unless you’re talking about a specific state.
“The Tax Cuts and Jobs Act (TCJA) doubled the estate tax exemption to $11.18 million for singles and $22.36 million for married couples, but only for 2018 through 2025. The exemption level is indexed for inflation reaching $11.4 million in 2019 and $11.58 million in 2020 (and twice those amounts for married couples).”
So it goes back to the regular exemption after 2025. If you want to take advantage of the doubling, die before 2025.
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Yes, well that still doesn’t address where @chipperd got his/her numbers as that comment seemed to be talking about the here and now, not beyond 2025 and even before that horrible TCJA, the estate tax limit in 2017 was 11m/couple so still not chump change. TCJA just helped the wealthy remain wealthy, but as someone previously mentioned if those people had the proper kind of trusts it wouldn’t matter anyway as the assets would be protected from estate taxes.
That is likely based upon the amount in 2014, probably whatever article that was googled was referencing that year. People don’t always consider that the amount actually changes every year due to inflation, and many are unaware of the short window that doubles the exemption.
As someone who has been burned by a greedy sibling regarding my father’s elder care and his final estate, I would say I will never take estate planning lightly. It only takes one person to “live like their parents owe it to them”, and I am wiser now.
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So sorry you have had to endure that. Unfortunately that is a reality for some people and it can get very ugly.
I have a friend who’s brother was living with her father. The father died (not because of the brother). Turns out, the father pretty much left half his estate to her, the other half to her daughter and a small amount to his other grandchildren from her brother and then completely left out each of her two brothers. They were furious and blamed her. Felt they were entitled to 1/3 of the entire estate. She is too nice and offered to split her share three ways, but those greedy sob’s said no because they wanted her daughter’s share too. We aren’t talking a ton of money either. It was less than $800k total. So, ultimately they sued and no surprise those idiots lost. It took a big bite out of the estate too, her daughter will have lifetime medical and other issues as she was an extreme premie (now 20) and they each received their shares. She was estranged from them for a bit, but they came crawling when they needed something and one of them sent her this whole letter about how she owed him and he needed money, etc. Sucked her right in. Over and over. Oh and her parents were divorced and her mom always made it clear that because her dad did that her mom wasn’t going to leave her anything. Her mom doesn’t have any money really, but seriously, who does that to her kid and trust me she does everything for her family and they are such free loaders. It’s sad. And who knows what the heck her father was thinking when he did that to her in the first place. She has no idea why.
So 100% agree with you. Estate planning is so important and while no child needs to know what they’re getting, a parent should really consider the repercussions of leaving a parent out of their plans as far as how it will impact the children and their relationship etc. It can get messy.
And in your case it sounds like people also have to be careful about who has control of the checkbook when the parent can’t manage it for themselves. When my grandma died, my cousin went into her apartment before anyone else could and took a bunch of stuff she wanted. Turns out she took some valuable stuff. My mom though had a bunch of the jewelry and my cousin was quickly sniffing around for it. Crazy what lengths some people will go through.
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^This. @BerneseMtnMom. A million times this.
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I’ll add also, that for anyone who doesn’t have a Will done, as icky as it sounds, you 100% should go and have one written up. They are not that costly and worth every penny. Make sure your executor is someone you trust and the last thing you ever want if you have substantial assets is to have a bank as you executor or successor executor. Just remember that whomever is your executor has a right to be paid for their services, but also in that case if it is a bank, they will not only cost a lot, it is then very complicated for the beneficiaries later on.
Not having a will and putting your estate into probate is another problem. At a minimum having a living trust to keep your assets out of probate and make the beneficiary of your assets the living trust.
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I will say as an only who has an only, it does make everything much more straightforward regarding estate planning.
Of course, that places all the burden of elder care on the only. I never experienced that, and Dh hasn’t either - only his mom is left.
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My dad was a good businessman in a small town and died young of cancer. Parents had a A-B trust set up and it worked well. I have four siblings, and the two youngest (sister and brother) who lived close helped enough with our mother and did preserve the estate - and they were co-trustees, however mother and the sister both dealt with bipolar disorder differently (mother’s own biologic mother was also bipolar) and not totally effective in their disorder handling (sister’s methods were with evening drinking and used exercise, and cutting people out of her life); this brother did get off pain medication but we had to closer review his actions (he also later was a convicted felon - you get the picture). Brother was sneaky about a couple of things. Sister all of a sudden had me go from wearing a white hat to black hat and has totally cut off everything with me for years (she probably some borderline personality disorder in there). My older brother and sister continue a relationship with me. Can’t fix this. Brother’s daughter has been sucked in by lies of her dad and her aunt, while the aunt’s daughter knows I have done nothing wrong and she keeps up with me. This sister has warm relationship with my children but has cut DH and me totally out.
I am going to have to write/document a lot of stuff so if I die before DH he won’t properly go through stuff w/o information - he has a tendency to just want to get rid of stuff/throw stuff out - he won’t know what stuff has any worth or what has family value (fine jewelry/fine costume jewelry, etc). He does know the china/crystal/sterling. He is understanding how our finances and financial planning works. I have studied our real estate options and know how to get the most value out of our home - he probably would do the minimum and just get what he can get quickly on sale.
Management 101 - Strengths/weaknesses/opportunities/threats.
@SOSConcern Wow that’s a lot to deal with. Unfortunately we all have problem family members in our family. My husband’s kids have never met mine. Bitter ex wife, yada yada. Anyway, if I die first, there are many things I’ve made sure my husband and kids are each adequately dealt with so no issues ensue amount them, but having said that, the last thing I want is for anything my husband inherits from me to ultimately go to his kids when he kicks the bucket. So, I have to do some creative EP for myself in that I need anything he is the beneficiary of mine to go in a trust for his benefit (FBO) and it is basically overseen by my executor (not him!) to allocate anything as he needs, but not all at once (my husband can be a spendthrift at times and I want him to actually have money if he lives 30 years past me…and then have the trust revert back to my kids instead of his kids because there is no way in hell his kids are going to get a penny of my assets. I’m 10 years younger so I shouldn’t be going way before him but still not taking any chances and don’t trust his kids to suddenly show up again. Just like if he dies first, I have no doubt they will show up on my doorstep 5 seconds after he is gone wondering what they’re getting. Good thing that is very clear in his will and he wasn’t under any duress or mentally incapacitated when he wrote that 9 years ago. Family can be real a-holes when they want to be.
@hoggirl I thank god every day I am not an only and that I don’t have only. My husband on the other hand is an only and I see what it is doing to him to deal with his mother. While EP is technically easier, although I am the beneficiary of her estate (there isn’t much there in any case), not him (long story on that, but has to do with his nutcase ex-wife) the issues he has had to deal with because in her words “she wishes she had a girl” and “her crime was giving birth to him” and all the rest of that stuff when dementia sets in and him not having any siblings to lean on or help has been unbearable. She is 91 and this woman will probably live for another 10 years. She yelled at him because he didn’t see her for 5 months, even though her place didn’t allow visitors. Ugh. The abuse is pretty bad and he has no one to share it with. He swears to me she wasn’t always like this, but she’s been in my life for more than 11 years and I’ve only seen her like this, so who knows? Anyway, can choose your friends, but not your family so we just continue on.
During our sidetrack to wills and trusts, some questions for those of you with experience:
- What do you think about naming one of your own children as executor?
- What type of trusts should be considered if you want more control over the distribution?
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Naming a kid is pretty normal. But whether it is correct for you is impossible to say. IMO the mistake is naming more than one person to serve together.
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Types of trusts to keep control. This is a state law question, so impossible to say. That is something to talk to the drafting attorney about, based on your purpose. It is a different tool if you are concerned about someone with a disability v if you have gobs of money. That said, it is really hard to control things from the grave, and trying to often backfires because unforeseen circumstances inevitably arise. Choose your trustee wisely, and design a plan that can be flexible.
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