All Forum Posts by: Daniel McNulty

@Tonya Rasmussen

You would still need to file a gift tax return. And technically its a gift not inheritance if he is still alive and well.

Without more details it’s tough to say with any confidence, but your father in law will likely continue paying taxes on the income received. Somebody is paying taxes on that income, just not the person receiving the gift.

@Tonya Rasmussen

As it was already mentioned, it doesn’t get much simpler than that. The yearly exemption doesn’t count towards the lifetime exemption. Everything above does.

As long as you take the yearly exemption it hardly matters when you disperse the rest. Assuming you have less than the lifetime exemption to gift, then it should be all tax free.

If you have more to gift than that you could probably use a more thoughtful plan to limit the tax impact.

@Jarrod Joplin

I’d you haven’t sold it yet there are a few options like a deferred sales trust.

If you already sold your best option is an opportunity zone.

@Steve Morris

It’s not like kind at all. It’s a common tax strategy for selling a business or any large asset for that matter. You recognize the tax as you receive the installments.

Often a trust is the intermediate step between the buy and seller that facilitates the deferral. It’s certainly not quite as simple as described here, but it is a legitimate tax plan.

@Jason Thomas

Installment sale is about the only way this makes sense but it is normally through a trust ..ie deferred sales trust.

However the annuity part is BS. It has no impact on the tax deferral of the installment sale. Use ETFs, real estate, classic cars or whatever floats your boat. It’s the installment part that causes the deferral not the investment that follows the sale.

If the advisor insists it’s the annuity causing the deferral, find yourself a better advisor.

@Maureen Rhodin

A LLC is a good start as it is helpful to have the relationship explicitly stated in the beginning.

If the idea is to keep in perpetuity, a trust can also be useful for estate planning purposes.

Either way, this is the basis for a more detailed conversation on your family wants / wishes.

@Sean H.

Yes your solo contribution reduces your magi.

You can still contribute to the IRA but you are in the phase out range (if mfj) so it would not be completely deductible.

@Dean B.

I’ve seen good and bad OZ funds. It’s no more complicated to execute than any other real estate fund on the other side of structuring. You just limit your deal flow.

Just don’t let the tail wag the dog. That is to say, sometimes its better to focus on great deals than tax deferral. You could always form a deferred sales trust to kick the can down the road quite a few years on that tax bill and not be handcuffed to specific areas.

Ask your attorney about them...

@Jeremy Dance

You may actually be just as well served by a team. A good CPA, advisor /planner, attorney, and self directed custodian can all play a distinct role for the items you identified.

You may find someone that understands it all, but no one person is likely to be able to accommodate every request alone.

@Kathleen D.

I am sorry for you loss. Wealth never replaces a loss like that.

If your mother is against all such risky assets that you listed, your options may be somewhat limited. I would caution against bonds if her intention is to hold for a number of years as normalizing interest rates will deliver returns below what  she is looking for. I would also caution that buying notes directly can be as risky as the assets she explicitly wants to avoid because of the unique skill set required. Annuities could do it, but doing so would come at the expense of losing the principle.

Perhaps some education on the different asset classes she explicitly wants to avoid would be the most fruitful. A mix of many assets in conservative quantities arguably is the safest way forward.