Estate Planning

1. Questioner: Dan

   Question: Could you kindly explain the advantages and mechanics of how living trusts work. I would like to know if it is worth putting my main residence in a living trust or some other vehicle to give to my children and still have the use of it. I don't want to create problems with a 5 year rule. Can you explain. I live in Oregon with my wife. Thank you very much. View Answer

2. Questioner: Eddie

   Question: Hi Richard, I currently own about 70,000 shares of GE stock which I accumulated in the past 30 years. My wife and I are retired and owned our house with no mortgage. We have no other financial obligations and are living pretty comfortably and healthy. We have 2 sons and want to pass down the stocks. Do you have any idea or suggestions as to how we should proceed with this? View Answer

3. Questioner: Paul

   Question: Lump sum for my Grandfather? My family has offered to sell me my grandfather’s home in Florida, it’s a great house near the ocean. My grandfather has gone into an assisted living after breaking his hip last winter. He loves it and is quite happy but needs about 1k a month more in income to not dwindle away his savings.I’m considering buying it as an investment (I do own other rental property, so the rental property plan is not new to me). Since I am an investor, I can only pay a certain amount for the house (as I would for any investment property). I would need to buy the house at a good price (especially in this market), but I’d like my grandfather to get as much as he realistically has planned to get on the house. If he was to sell it to me for say 140k and its market value is 170k, that’s a win for me but not for my grandfather. So what I’d like to do is give his 15k down and have him finance me at 7% interest amortized over 30 years with a balloon or demand option for his after 36 months. If he wanted all of the money at that time then I’d pay him off or we can continue the loan but I would write in a 2% drop in the interest rate at that time. This way he will make approximately what he would like for the house without actually selling the house for that price, he be making the money in the form of interest on the mortgage he would give me. Anyway this is my plan but my question is if the family decided to just sell the house outright to someone else and get a lump sum of money (say 170k) and if my grandfather got sick, could that money be taken away by the Government for his care? I am wondering because if so, my plan may not only be a win-win but may be an important way for us to protect the equity he’s earned on the house. If my grandfather were to take a lump sum in a sale from someone else is it possible that the money could be taken away if he became very ill? If so, wouldn’t that make my case make even more sense for him? This is not about doing a co-own, or anything like that, it would be a purchase of the property with him financing me. There is a company that specializes in family lending and I would set the mortgage up through them to ensure compliance with regulations and to minimize any unnecessary scrutiny with the IRS. I have excellent credit, so it’s not that I couldn’t’ finance though normal means but this way my grandfather makes more money on the house than he will realistically in this market. View Answer

4. Questioner: Marilyn

   Question: My mom passed away and left a CD w/Dad as co-owner, and named 3 of 5 children ad beneficiaries -- He kept the entire CD and put it in an annuitiy for 7 yrs. and named 3 of the 5 as beneficiaries. He's 84 yrs. old. and does not have a will and refuses to do so. When he passes, will the 3 beneficiaries have access to the $ before the 7 yrs. and, is there a penalty for early withdrawal? View Answer

5. Questioner: Jennifer

   Question: When my father dies and has a will and an insurance policy am I responsible to pay any outstanding debt? Me and my brother are both listed as primary beneficiaries for the insurance policy. He has no bank account, no car, no credit cards, no home. In his will he has listed me as Executor and the only assets he has are the items in is apartment. I am not sure if all of his funeral expenses are paid for. I am looking into it. Please help me with my question. Jennifer View Answer

6. Questioner: Jim

   Question: The IRA I just opened asked me to designate beneficiaries. Ditto the 401K at work. I listed my sister on both, since she's not doing too well right now. (I'm not married and have no kids.) Afterward, I thought this was a mistake, because I also have a brother. And I wanted to include them to share equally in my assets, should I die.

   How can I fix this? Can I file new beneficiary forms with the IRA and 401K saying "by law"? Will that ensure that the money goes per my will in the event I die? View Answer

7. Questioner: Mary

   Question: My son inherited a 401K from his father in 2006. They sent him a check for the full amount. He understood that none of his inheritance would taxable. However, he got a huge tax bill. He's been in and out of work for the last 4 years and is currently unemployed with no unemployment benefits. He has $10 to his name. What can he do. View Answer

8. Questioner: Dan

   Question: My mother has a lot of money and she is starting to think of giving some to her chidlren. How much can she gift to her children per year without tax consequences to giver or recipient? Is it better to keep it all in the estate to divide when she dies or to start spreading it out now. View Answer

9. Questioner: steven

   Question: Revocable Living Trust. Under what conditions would you recommend that a person get a Revocable Living Trust?
   Other than avoiding probate and confidentiality, what are the advantages and disadvantages of a Revocable Living Trust? View Answer

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