[nodmicks]

My inlaws announced about a month ago that they wanted to put both dh and I on their checking accounts. I am added also because they know dh has never done any budgeting or bills and if they need help it will be me doing it. I told them I thought they should just draw up the papers with an attorney to give dh financial power of attorney if/when it is needed.

They are responsible people financially so there is not a worry of them bouncing checks etc. Is there more to this than I am seeing? From research we are ok doing this unless there is a biggie I am missing.


Here is another side of this and I told the inlaws they need too see an attorney because I see a big tax problem, with this for us! Their home is paid for. They want to give it to dh to avoid losing it if they run out of $. First I personally feel it is unethical. Second upon both of their death the house would be sold and split with dh's siblings. I see a very huge tax nightmare.

I believe dh would be taxed big time on capitol gains as it has appreciated 5 fold and we would not live there. Then there would be gift taxes when it was split with his siblings. It also would affect our kids being able to qualify for college loans etc as it would look like we have a second property that is quite valuable.

I'm not at all up on this kind of stuff but I told dh this is a terrible idea and in no way to do this until we all see an attorney together. MIL thought the whole problem could be avoided by then putting it in all her childrens names. NO I dont think so.

For the records my inlaws are in their early 60's and healthy. Their retirement income is quite generous and they would never qualify for medicade for nursing home care. I strongly encouraged them to buy long term care insurance and have the attorney discuss trusts with them.

Ok villagers what do you think? Am I on base or way off????

 

[Spirit Deer]

They do not need to see an attorney to have names added to a checking account. That isn't necessarily going to be a tax liability to you, either. It wasn't when my husband's name was added to his dad's account. His dad was the primary account holder, but my husband was able to pay FIL's bills and buy groceries for him and things like that. Talk to your IL's banker about that topic. They should be familiar with the tax details in your state.

An all-encompassing power of attorney is a whole other matter and needs careful consideration and some research, IMO. My husband has one for my mom, and it carries, literally, the power of life and death, as he can sign to have her taken off life-support if things ever come to that. My mom set it up that way because she didn't want me or my brother to have to make that decision for our own mother, and because she knows we talk about everything and would discuss it with my brother as well. My husband can also handle any of her finances as need be, and he will be the executor of her will. Your IL's can pick and choose what they want you to have control of within their own POA. They may choose to give less control or to split control between siblings for different areas or to give joint control so more than one person would be involved in the same POA.

It sounds to me like they need to talk to an estate planner. That would be an attorney who specializes in helping people set things like this up. That person would be able to explain tax liabilities and the other issues you've raised, along with answering questions about non-money issues such as a POA for medical issues.

They may want to do things like pre-pay funeral expenses, too.

The clinic or hospital they use may have a social worker on staff who can talk to them about planning end of life issues, and talk them through things like setting up DNR orders. That person would also have information about state laws involving disbursement of assets prior to entering a nursing home.

I think it's a good idea to talk to professionals about these issues, not only to get accurate information, but because these subjects are very emotional for families. Someone without a personal stake can look at things more clearly.

It's very important that your IL's are being upfront with their wishes. Some families never discuss these difficult things, and then when something happens and the family is least able to cope, no one knows what their loved ones wanted done. Encourage them to seek professional advice. It sounds like they can afford that, and it would give them and the rest of the family peace of mind that things are being handled as they would like, in a way everyone can be comfortable with.

 

[Guest]

I'm not totally up on everything, but I think you are right about getting hit with a huge tax bill if they "give" the house to your husband. I know if they still have the house when they pass you get to inherit it on a "step up" basis - which drastically helps the tax burden when selling it - but I think you'll wind up with a much larger tax bill doing it the way they are proposing.

I also agree that they need to see someone who specializes in estate planning.

 

[nodmicks]

Spirit. I have all the papers and power of attorney stuff for my mom if /when we need it so I am familiar with that.

I do agree this is what they need to do. Dh is the executor. Dh has the keys to the safety deposit box etc. They love all their children equally but dh will be in charge because as MIL says " he is the only responsible one and he has you to help him"

They have all their funeral stuff done. They did it a few years ago after my dad died. Thats when my mom did hers also.

I will tell dh that this can not be done now. They need to discuss it with the estate planner lie you are suggesting. I called a friends son who is an attorney and ye yelled "no!" and gave me a name of another attorney.

MIL didn't seem to get my reservations about this but FIL did. My MIL is wide open about their finances and has had me help her previously but this is way out of my scope!

 

[Spirit Deer]

Good luck. It can get confusing and overwhelming quickly.

Your tax liability on the house could depend on the laws of your particular state, so I don't know how much any answers on a message board will help because laws vary so much. That's why it's so important to talk to a professional about it all.

 

[Josephhgoins]

When my Step-grandfather died he willed the house to his 3 sons with his wife a lifetime dauery (sp?) (this was in the 70's). She passed away in 04 and the house sits there waiting for her to come back. Everything is as she left it. Until 09 when we decided to turn off the power there was still food in the freezers.

At any point in time 1 of the sons does not want to sell and the other 2 do. I am unsure if anything will ever happen to the house. We have been paying taxes (which in that area is very reasonable) and upkeep ever since then. I feel confident that when my Step-father dies the house will be willed to me and my siblings.

I know this has nothing to do with your checking question, just wanted to tell you our experiance with the "leaving the house to the kids" thing.

besides the tax issues of putting the house in your husbands name what will this do if his siblings find out? There could be grounds for all sorts of lawsuits (i.e. one of them gets divorced and wants their share of the hosue early).

Sounds like you guys got nominated for some really great headaches.

 

[nodmicks]

Good luck. It can get confusing and overwhelming quickly.

Your tax liability on the house could depend on the laws of your particular state, so I don't know how much any answers on a message board will help because laws vary so much. That's why it's so important to talk to a professional about it all.

I guess i just wanted someone to confirm my suspicions on the tax part may be right and that i wasn't being irrational.

 

[nodmicks]

When my Step-grandfather died he willed the house to his 3 sons with his wife a lifetime dauery (sp?) (this was in the 70's). She passed away in 04 and the house sits there waiting for her to come back. Everything is as she left it. Until 09 when we decided to turn off the power there was still food in the freezers.

At any point in time 1 of the sons does not want to sell and the other 2 do. I am unsure if anything will ever happen to the house. We have been paying taxes (which in that area is very reasonable) and upkeep ever since then. I feel confident that when my Step-father dies the house will be willed to me and my siblings.

I know this has nothing to do with your checking question, just wanted to tell you our experiance with the "leaving the house to the kids" thing.

besides the tax issues of putting the house in your husbands name what will this do if his siblings find out? There could be grounds for all sorts of lawsuits (i.e. one of them gets divorced and wants their share of the hosue early).

Sounds like you guys got nominated for some really great headaches.

Joseph that does sound like a mess! I actually talked to MIL after talking to an estate planning attorney by phone today. I explained to her it would kill her son in taxes and the problems involved. They are going to go see an attorney. Yeah!

In the scenario you asked about his siblings would know and likely be mad as heck! I also explained to MIL that though dh would always follow her wishes and share that legally if she put the house in only one child's name that child legally owned the property and was in no way obligated to share according to the attorney

They can hash it all out at the appt!

 

[patrecia]

I am working in a private firm an earning a decent package.I want to make some pre plans for the need in future so that me and my family can live a good life so please recommend me some financial planners which can guide me in better way.

 

[Greebo]

Federal tax liability is national, not state dependent. As I recall, if the house is gifted to you, then you pay taxes on the gains based on what THEY paid for it when they bought it, and since it's not your personal residence, it's not exempt from the $250,000 capital gains exemption on the sale.

Also if they gift it to you then its yours, not theirs, and their will has no authority to demand that the house be sold and distributed to the siblings on their death.

Finally, if they gift it to you this year and go broke next year due to medical bills, Medicaid does a five year look back, and will reverse the gift and take the house anyway.

Get an attorney and a qualified estate planner. Your parents are trying to "do it themselves" and are headed into DANGEROUS ground here.

 

[nodmicks]

Federal tax liability is national, not state dependent. As I recall, if the house is gifted to you, then you pay taxes on the gains based on what THEY paid for it when they bought it, and since it's not your personal residence, it's not exempt from the $250,000 capital gains exemption on the sale.

Also if they gift it to you then its yours, not theirs, and their will has no authority to demand that the house be sold and distributed to the siblings on their death.

Finally, if they gift it to you this year and go broke next year due to medical bills, Medicaid does a five year look back, and will reverse the gift and take the house anyway.

Get an attorney and a qualified estate planner. Your parents are trying to "do it themselves" and are headed into DANGEROUS ground here.

Greebo we got this all taken care of back in May when I originally posted. Dh's parents not mine. I only have 1 parent and she sold her home and now rents. I am the only surviving child so easy there. I fully hope my mom enjoys and spends all her $!

The situation with dh's parents was all wrapped up with an estate planner . No way were we getting stuck with the mess ,paying the taxes then being expected to divide the profit. The only thing we actually have our names on is POA and I can write out checks and do banking for them if needed. I also hope they enjoy their $ and spend it instead of leaving it to their kids. They earned it. They should enjoy it

Your right it was all a bad idea on ILS behalf. They just didnt know the legalities of what they were trying to do. My parents once bought my Grandmothers home years ago when dad was still living . They made sure to pay fair market value to safeguard exactly what you are warning about.

 

[Greebo]

Oh, I see, I got snared by a

 

[nodmicks]

Darn I can't see the pic Greebo.

 

[Greebo]

How about now?

 

[nodmicks]

LOL Greebo!

 

[frugalfranny]

Dh is the executor. Dh has the keys to the safety deposit box etc.

:thud:...............GOOD LUCK............:toothy:

Please DOUBLE CHECK all forms that they have filled out thus far and make sure ALL PAGES are there. IE: the clause pages on the will and clause pages on any codicil..........also MAKE copies!

I know, doesn't have much to do with what you ask, ...

but I am currently an executor that has been nothing but a headache so far.
(due in lg. part to my dad's totally incompetent atty.)

 

[nodmicks]

Frugalfranny I am so sorry it has been a nightmare for you! Hugs!

 

[frugalfranny]

I am currently 'speed reading' a really good book right now about being an executor..........and have another 'in the wings' to read.

Got them at my library and they truly are interesting to read.....I have learned a BUNCH!! Might be worth your time......

The Executor's Guide by Mary Randolph, J.D.

And the other that is waiting is:
Plan Your Estate by Attorney Denis Clifford

I thought they would be boring and dry.......but they aren't, and they have some legal things that are state specific.
If you like learning.........some interesting stuff!

 

[nodmicks]

Thanks I'll put them on my library list!

 

[johnnystrauss77]

My wife and I are considering seeing a financial planner. I have kind of talked about this before on this site but now are actually wanting recommendations for an actual planner to visit. I am going to do some of my own research on this but wanted to see how some of my fellow fanatics have faired with their own planners.