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  1. #16
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    Quote Originally Posted by KickSave View Post
    Its not entirely that simple though. Some of that depends on where the money came from, how the money was gained/stored before being left to an estate, specifically if it came out of any tax deferred accounts like an IRA/401K.
    We are talking about two seperate forms of money here - that which was gifted to JBlaze from his parents, and the money that was gained through inheritance from his relative. The money from inheritance may have tax implications tied to it as you pointed out, but that will be paid by the estate not by JBlaze.
    "We are what we pretend to be, so we must be careful about what we pretend to be."
    -Kurt Vonnegut "Mother Night"

  2. #17
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    Quote Originally Posted by Nunchuckz View Post
    Most sound financial advisers will tell you to make sure you are all set for retirement before setting up your kids college fund.
    I have spoken with a friend who is also my sort of financial advisor and he does say the book will say to load up your retirement. I have a Roth, another financial account mixed with stocks/funds, my kids 529 and work provides a 401K and pension, etc. I've been thinking about retirement for a long time. I'm just looking at ways I can use this new found money to fund schooling.

    As stated before, I have 529 college funds from myself and my parents for the kids already in place. It's being funded as we speak on a monthly basis. The more immediate outlook was private school for pre-college. The public school system here is very shoddy once you pass elementary. I'd like to give my kids the best chance to succeed in life at an early stage. Prior to this new money, sending them to these private schools were out of the question. $22-25K per year x 2 is a lot of money.

  3. #18
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    Quote Originally Posted by Fandango View Post
    We are talking about two seperate forms of money here - that which was gifted to JBlaze from his parents, and the money that was gained through inheritance from his relative. The money from inheritance may have tax implications tied to it as you pointed out, but that will be paid by the estate not by JBlaze.
    I don't believe that is correct. The estate would pay nothing if its under the limit, but with an IRA its typically rolled over into a new account for the beneficiary. That new IRA, would have withdrawal rules just like the old IRA, that is, you must take annual withdrawals if the former owner was over 67 years, or you could take a lump sum withdrawal, but they would both be taxable as regular income to the person making the withdrawals, the recipient.

    You cannot put away tax free money into an IRA, then die and leave it to your children (or anyone) and have them withdraw the funds tax free. The recipient of the IRA pays taxes on the withdrawals just like the former owner had to, except that its based on the total income of the new recipient.

    I just went through all this so the rules are somewhat fresh in my mind. Still... go see an accountant for tax advice, not KFFL.
    "What's so funny about peace , love and understanding?" - Elvis Costello

  4. #19
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    Quote Originally Posted by Fandango View Post
    Nun -it sounds like JBlaze is in a pretty solid financial footing, based not only on this thread but other insinutations that he has made in the past. So he might be in a position where both are possible.

    My first piece of financial advice is always get rid of any debt. So that would mean paying down/getting rid of his mortgage as a first step.

    A couple things to note since JBlazes children are his dependants he can gift them as much as he wants without being taxed. So that could be a good way to setup educational funds for them as well. Both his parents can give he and his wife up to $14k each (so a total of $56k given to the JB family) without his parents incurring any gift tax. Since the estate tax in America has an extremely high exemption, unless JB is getting money into the millions of dollars he won't be paying any taxes on that either.
    Quote Originally Posted by Fandango View Post
    We are talking about two seperate forms of money here - that which was gifted to JBlaze from his parents, and the money that was gained through inheritance from his relative. The money from inheritance may have tax implications tied to it as you pointed out, but that will be paid by the estate not by JBlaze.
    Correct Fandango. No millions here unfortunately

    Thanks for the advice, I'll look into it and what KickSave said more. Time to find me a professional money man

  5. #20
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    Put it all on black ... let it ride ... that would be a fun conversation with your children when they grow up!

  6. #21
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    haha.....son, you could have been a doctor, but the damn 49ers couldn't cover the 3 points that one game.Sorry bud.

  7. #22
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    There is also more things to factor in. Money left via a will, if its of any significant size, goes through the estate settlement process, which takes a long ass time to settle, has a mandatory disclosure period where you have to make a public announcement in case there are any unknown leans, and a lot of process. Its a PITA. Money left directly, as in you are listed as the direct beneficiary of the account, skips the will/estate process, but is still subject to the tax requirements above.

    Its just not at all as simple as reading one page from IRS.gov and considering that complete legal and tax advice. Gift money has similar complications about what its used for effecting the tax status, who can receive it, etc. Gift taxes are paid by the donor, but Spouses can receive gift money tax free, while Children CAN NOT, unless its specifically used for their tuition or medical. This is to avoid rich parents simply "gifting" their entire estate to their kids right before they croak, as if that was a way to get around estate taxes.

    Go see a professional.
    "What's so funny about peace , love and understanding?" - Elvis Costello

  8. #23
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    Quote Originally Posted by KickSave View Post
    Go see a professional.
    Yes sir!

  9. #24
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    Quote Originally Posted by KickSave View Post
    I don't believe that is correct. The estate would pay nothing if its under the limit, but with an IRA its typically rolled over into a new account for the beneficiary. That new IRA, would have withdrawal rules just like the old IRA
    I didn't know that we were assuming in this scenario that it was an IRA that he was the listed beneficiary of, that is a very big leap given the information that was provided earlier. IF we are not assuming that, as we have no reason to, and he is one of the multiple recipients of an overall estate than the IRA rules wouldn't necessarily apply and it would only be determined by the overall value of the estate. And the estate itself, not JBlaze would have to pay the tax.

    Quote Originally Posted by KickSave View Post
    Still... go see an accountant for tax advice, not KFFL.
    That is a given, I wasn't suggesting that he forgo professional advice, just giving him somewhere to start.
    "We are what we pretend to be, so we must be careful about what we pretend to be."
    -Kurt Vonnegut "Mother Night"

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