Globe Syndicate

 

For release Friday November 05, 2004

 

 

The Sandwich Generation . . . Helping Your Aging Parents

 

by Carol Abaya, M.A.

 

 

CHILDREN  HAVE  NO RIGHT

TO PARENTS’  ASSETS UNTIL DEATH

 

Question:  We want our parents to turn over their house to us (myself and brother) now so we don’t have to pay inheritance taxes later on.  They refuse.  How can we convince them?

 

Answer:  Back Off!  Carved in stone!  Your parents are 100% correct! 

 

Why should they give up control of their home, their biggest asset?  They should NOT.  Deeds should ALWAYS be in the elder’s name(s).

 

As for inheritance taxes, with the $1.5 million exemption for federal taxes, it is unlikely there will be any taxes due.  While state exemptions are sometimes lower than this, most people do not have to pay taxes.

 

However, if they did turn over the house (or any other asset) to you, then when you sell you will be hit absolutely with at a 15% capital gains tax.  Capital gains taxes on gifts are based on the original cost of the house/asset. If your parents bought the house many years ago, the capital gains tax can be substantial and even more than inheritance taxes.  If they Will the house to you, then there are no capital gains taxes due when you sell.

 

Inheritance taxes update:  There are no federal taxes if a surviving spouse inherits.  The amount can be a little or millions of dollars.  There might be a tax at a state level.  However, most states do allow a spouse to inherit an unlimited amount.

 

If someone dies with more than $1.5 million in NET assets, there will be a federal tax, if the beneficiary is anyone other than a spouse.  With the change in the federal law, it seems each state has its own rules.  So check.

 

More DON’Ts:   Seniors/elders should not put assets in joint accounts (bank or stock brokerage) with an adult child.  They should always keep assets in their name only. This money is put at risk.  The key financial responsibility of adult children is to protect their parents’ assets in whatever way possible.

 

There are number of ways an elder’s money/assets are at risk if there are joint accounts. If an adult child dies before the parent, that money is accountable in the child’s estate. If the adult child is involved in a nasty divorce situation, the spouse can try to get some of that money.  If the adult child or his/her spouse is involved in a bankruptcy proceeding or owes money to a creditor, that creditor can go after that money.   And money put in joint accounts is considered a gift for federal gifting purposes and there eventually can be a negative tax implication.

 

In my special seminar, How To Protect Your Assets: What NOT To Do, I go into a lot of detail on how seniors can and should protect themselves.

 

 

Are you juggling doing errands for your aging parents, your children, yourself and working at the same time?  Are you tired, stressed out and upset that your once vibrant parent is now frail and needy?

 

Do you feel alone?  Rest assured you are not alone!  The Sandwich Generation is dedicated to the 50 million Americans who may have elder/parent care concerns and/or responsibilities.

 

 

 

* * *

 

Do you have a question? Send it in. Although letters cannot be answered individually, appropriate letters will be answered in this column whenever possible. Letters may be edited. Send letters to Ms. Carol Abaya, mail direct to her at PO Box 132, Wickatunk, NJ 07765-0132 or contact her through her web site: thesandwichgeneration.com.

 

Carol Abaya is an international-award-winning journalist and creator of the unique magazine The Sandwich Generation: You & Your Aging Parents.

 

NOTES TO EDITORS: text = 527 words; other material = 160 words

 

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