Should I accept a large cash gift from my mother?

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Grogs
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Should I accept a large cash gift from my mother?

Post by Grogs » Fri Aug 10, 2018 9:34 am

Hi all,

When my father died, my mother was left with quite a few rental properties. She has since decided that she doesn't care too much for the stresses of being a landlord, and so this year she has sold off most of the big ones. It wasn't ideal from a tax standpoint, but the stress was affecting her health so it was the right decision for her. Now that she has sold everything, she has paid off the mortgages on the remaining properties and earmarked some of the money for repairs on her home. After that, she expects that there will be a good amount of cash remaining. We'll have a better estimate of the amount remaining once her accountant prepares estimated taxes for Q3, but it could be as much as $250k. Her retirement, SS, and income from the few remaining rentals easily cover all of her living expenses, so she's been trying to figure out what to do with the excess.

She's stated several times that she wants to just give the money to me, but I'm trying to decide if that's a good idea. If she gave it to me, I would probably pad my emergency fund a bit and then invest the rest in my taxable account (100% VG TSM - VTSAX, but I would add bonds in my 401k to get back to my 75/25 AA). The alternative seems to be for her to keep it and invest it herself. I would help her open a taxable account and invest it. I'm trying to weigh the pros and cons of these two choices, and I would welcome the input of those who have possibly been in a similar decision. She's in good health right now, and will be turning 74 in a couple of months. The issues I've thought of so far are:

- Gift "tax". This one seems like a non-issue because her estate will never come anywhere close to the federal limit, and our state has no gift tax. She has an accountant doing her taxes, so I don't think filing the one extra form for going over the $15k limit will be much of a burden.

- Capital gains. If she invests the money, I could potentially inherit it at a stepped up basis (hopefully) many years down the road. If we needed to take some out several years down the road, she may be below the 15% LTCG threshold and not have to pay any taxes.

- Long-term care. If she needs long term care many years down the road, then having the money in her account would count against her assets. I know there's a 5 year look-back period where it would count either way, but after that if I understand correctly it would no longer be considered.

Are there any other issues that I have missed? Suggestions on which way you would go, or other variables to consider? Thanks!

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cheese_breath
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Re: Should I accept a large cash gift from my mother?

Post by cheese_breath » Fri Aug 10, 2018 9:44 am

What if she has an large unanticipated expense (not medical) after she gives all her money to you? Do you give it back?
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mouses
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Re: Should I accept a large cash gift from my mother?

Post by mouses » Fri Aug 10, 2018 9:45 am

She should keep it. What happens if you die first or become incapacitated and she needs it. She could easily live 20-30 more years with unexpected expenses, not only major illnesses but very expensive dental work such as discussed in another thread.

Dottie57
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Re: Should I accept a large cash gift from my mother?

Post by Dottie57 » Fri Aug 10, 2018 9:48 am

Agree with others. She should keep the money.

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vineviz
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Re: Should I accept a large cash gift from my mother?

Post by vineviz » Fri Aug 10, 2018 9:49 am

Grogs wrote:
Fri Aug 10, 2018 9:34 am
Are there any other issues that I have missed? Suggestions on which way you would go, or other variables to consider? Thanks!
As far as I can tell, you've covered all the angles.

On balance, I think if I were in your shoes I'd probably "let" your mom give you at least a good chunk of the potential $250k. It sounds like she might be the kind of person who'd derive a psychic benefit from making the gift, so I'd find a way to give her that joy.

I might might also use some of the money to plan a trip or some other fabulous experience with her while her health is still good, and use the rest as you outlined.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Jack FFR1846
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Re: Should I accept a large cash gift from my mother?

Post by Jack FFR1846 » Fri Aug 10, 2018 10:01 am

Do you have kids in college? She can pay directly to the college to cover those costs and that contribution does not count towards gifts given.
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NotWhoYouThink
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Re: Should I accept a large cash gift from my mother?

Post by NotWhoYouThink » Fri Aug 10, 2018 10:17 am

Maybe she'll decide to travel more. Maybe she'll need it to move to a more suitable home when she gets older, or to upgrade her current home, or to get help for caring for her home and yard.

Tell her to keep it and suggest she can revisit the decision in a few years.

Grogs
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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Fri Aug 10, 2018 10:22 am

mouses wrote:
Fri Aug 10, 2018 9:45 am
She should keep it. What happens if you die first or become incapacitated and she needs it. She could easily live 20-30 more years with unexpected expenses, not only major illnesses but very expensive dental work such as discussed in another thread.
cheese_breath wrote:
Fri Aug 10, 2018 9:44 am
What if she has an large unanticipated expense (not medical) after she gives all her money to you? Do you give it back?
Thanks, good questions. We're the primary beneficiaries on each other's wills, POD beneficiaries on each other's retirement/investment/bank accounts, and we have powers of attorneys for each other. So if I were to die, she would just inherit it back, right? Is probate a concern here, i.e., having the money tied up for a long time waiting on the estate to settle? If I were stuck in a coma or something, she could sell my funds to cover, or use the long-term disability from work. Management would be an issue for her (figuring out how to sell lots of the taxable account for example), but I think she would have the same problem whether the funds are in my name or hers.

As for large unanticipated expenses on her part, yes, I would give it back if she needed it. There could be some painful tax consequences if there are significant gains and I have to sell, but that's also a potential issue if she has it in a taxable account. And to be clear, this wouldn't be *all* of her money. She still has an IRA and an emergency fund that is significantly larger than mine. It's just that neither of us has any particular need for the money right now and we're trying to figure out the best way to put it away for the future.

Mike Scott
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Re: Should I accept a large cash gift from my mother?

Post by Mike Scott » Fri Aug 10, 2018 10:25 am

She should keep it. But if she insists on giving it to you, say thank you and then keep track of it so that you can use it for any future needs that may come up when she needs money. Sometimes there is not a gracious way to refuse a gift from a determined giver.

jhwkr542
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Re: Should I accept a large cash gift from my mother?

Post by jhwkr542 » Fri Aug 10, 2018 10:28 am

If the choices are you invest it or she invest it, there are more advantages to her investing it.

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gunn_show
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Re: Should I accept a large cash gift from my mother?

Post by gunn_show » Fri Aug 10, 2018 11:23 am

jhwkr542 wrote:
Fri Aug 10, 2018 10:28 am
If the choices are you invest it or she invest it, there are more advantages to her investing it.
I have some experience with this, as my mom's mother passed away in the last couple years, and I helped mom go through the estate and accounts and divvy out the extensive inheritances to several entities, including our family. We have since then firmed up my parent's estate/trust and now my own.

I would do the option you mentioned - mom keeps her money, help her set up taxable funds or some combination of things. For my mom's cut of her inheritance, we put a big chunk into a Goldman Marcus savings account (1.85%), set up a six figure CD ladder (1yr, 2yr, 5yr), and then put a big chunk into her Fidelity taxable account for the stock investing upside. That way she has money in savings for travel or buying herself something nice, or if she wants, giving you $14k a year in gifting. Then she has a bigger chunk locked up in higher earning instruments for longer term (the CDs and taxable).

Once she passes, as long as all these accounts are in her will and trust, you should inherit a much larger sum of money, tax free, stepped up basis.

Ideally, for you and her, this would be my best recommendation. Her money remains within her control in case she ever needs it, wants to use it, donate it, needs long term hospice care, etc. But is also growing and available for you later on.
"The best life hack of all is to just put the work in and never give up." Bas Rutten

Thegame14
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Re: Should I accept a large cash gift from my mother?

Post by Thegame14 » Fri Aug 10, 2018 11:46 am

she should get assets out of her name sooner than later. If she ever needs to go on medicaid, there is a 5 year lookback

DarthSage
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Re: Should I accept a large cash gift from my mother?

Post by DarthSage » Fri Aug 10, 2018 12:00 pm

I would encourage her to keep it. She might need it for unexpected expenses down the line. It doesn't sound like either of you have a need for this money right now--if she keeps it and, say, you then inherit in 25 years, your cost basis will be stepped up--any gains in those 25 won't be taxed.

I also, personally, have a problem with worrying about medicaid and look-back and all that. This is your mother's money, which presumably is intended to keep her comfortable in her declining years. If she gives it away in anticipation of being indigent and qualifying for Medicaid, then she's stuck, well, getting Medicaid-quality care. High-quality Medicaid facilities exist, but are few and far between. I would rather have my mom maybe age in place, with daily nursing visits, than sharing a double-occupancy room with another indigent patient. Or just being a private room, with a private duty nurse, if that's what she needs down the line. Money is power--don't let her give that up too freely, just because she's doing well now.

That said, since she's currently healthy, it might be nice to take some of the money to go on a vacation or otherwise enjoy time together. The money will likely be there in the future--at some point, it's the time that runs out.

sailaway
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Re: Should I accept a large cash gift from my mother?

Post by sailaway » Fri Aug 10, 2018 12:18 pm

When my Mom has offered, I have told her to keep it and try not to run out.

Of course, in my case it was not only cash for me, but loan forgiveness for my brothers, so it was worth 3x to her what it was to me. And yes, I did tell her the loan forgiveness was up to her, she didn't owe me anything. But her mother used to give change with Christmas presents so that everyone was treated equally.

c1over8
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Re: Should I accept a large cash gift from my mother?

Post by c1over8 » Fri Aug 10, 2018 12:20 pm

+1 to the poster above who said that if the time comes, mom probably won't want to qualify for medicaid and would prefer to spend her money for care

You say she is safe from estate taxes but haven't given much information about her assets. Will she still be safe if she dies after the increased exemption sunsets?

No one has mentioned it so I'll throw it out there that if you decline the gift and mom decides to marry the pool boy, the pool boy may wind up with this money rather than you.

But I agree with the others that your mom should probably keep the money (or at least most of it).

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celia
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Re: Should I accept a large cash gift from my mother?

Post by celia » Fri Aug 10, 2018 12:23 pm

Is she properly insured? Besides medical, are all her remaining properties insured for the correct amount and does she have liability insurance? With renters in the properties, there is the chance of damage (either from them or from weather) and for being sued if someone falls/gets hurt. She has a lot more at risk than you probably have so needs to have more resources available for all of life's "what if"s.

Why not help her put the extra cash into investments that she doesn't need to think about. Even 10 more years of growth (before she dies) will give you a nice step-up in cost basis. If she has more income than she needs, she could consider giving her RMDs directly to Qualified Charities using QCDs and not have to pay taxes on the withdrawals.

Thegame14
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Re: Should I accept a large cash gift from my mother?

Post by Thegame14 » Fri Aug 10, 2018 12:31 pm

my grandfather developed Parkinson's and we had no choice but to put him into a "home", the cost was up to $9K per month depending on what kind of room and level of service. So you may not think it can happen, but if it does the yearly cost of that care he had was around 100K. Luckily the VA helped, but the rest we had to sell the house he lived in for 60 years and when he was gone everything he worked for his entire life went into him being in a home those last few years.

https://www.seniorliving.org/lifestyles ... mes/costs/

47Percent
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Re: Should I accept a large cash gift from my mother?

Post by 47Percent » Fri Aug 10, 2018 1:14 pm

Grogs wrote:
Fri Aug 10, 2018 9:34 am
Hi all,

When my father died, my mother was left with quite a few rental properties. She has since decided that she doesn't care too much for the stresses of being a landlord, and so this year she has sold off most of the big ones. It wasn't ideal from a tax standpoint, but the stress was affecting her health so it was the right decision for her. Now that she has sold everything, she has paid off the mortgages on the remaining properties and earmarked some of the money for repairs on her home. After that, she expects that there will be a good amount of cash remaining. We'll have a better estimate of the amount remaining once her accountant prepares estimated taxes for Q3, but it could be as much as $250k. Her retirement, SS, and income from the few remaining rentals easily cover all of her living expenses, so she's been trying to figure out what to do with the excess.

She's stated several times that she wants to just give the money to me, but I'm trying to decide if that's a good idea.
Most everyone seems to be largely ignoring the fact you mentioned about
a) your mother's health
b) Money complications adding to her stress, and
c) Her actively *wanting* to give the money to you.


Also, the information that are missing:
1) Her age
2) Your age
3) Whether you have any siblings.
4) Your net worth & Her net worth.

The last one in the list is necessary, for example in the scenario hers is $500k and yours is $5M, the conclusion may be different than say, hers in $1M and yours is $500k.


This is NOT a question of you angling for her money (pardon me if it comes across as too strong a word, even in the hypothetical)


My suggestion would be to accept the gift gladly and with gratitude -- with the following caveats.
  • Do it only if you are her only son/daughter. Look for other solutions if not the case.
  • Make sure that she clearly understands that this is a gift and not a loan.
  • At the same time, you can assure her that you would try to help her if she needed the money in any way you can.
  • Invest it separately (or at least a major chunk of it) in a separate account, and designate that account with her as the sole beneficiary -- till she passes. This would take care of the situation something happened to you before her time comes.
  • Do something extra nice every year for her from the dividends/capgains distributions from that account.

Grogs
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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Fri Aug 10, 2018 3:28 pm

Thanks, lots of good questions/info. I'll answer this one first because it asked several pertinent background questions.
47Percent wrote:
Fri Aug 10, 2018 1:14 pm
Grogs wrote:
Fri Aug 10, 2018 9:34 am
Hi all,

When my father died, my mother was left with quite a few rental properties. She has since decided that she doesn't care too much for the stresses of being a landlord, and so this year she has sold off most of the big ones. It wasn't ideal from a tax standpoint, but the stress was affecting her health so it was the right decision for her. Now that she has sold everything, she has paid off the mortgages on the remaining properties and earmarked some of the money for repairs on her home. After that, she expects that there will be a good amount of cash remaining. We'll have a better estimate of the amount remaining once her accountant prepares estimated taxes for Q3, but it could be as much as $250k. Her retirement, SS, and income from the few remaining rentals easily cover all of her living expenses, so she's been trying to figure out what to do with the excess.

She's stated several times that she wants to just give the money to me, but I'm trying to decide if that's a good idea.
Most everyone seems to be largely ignoring the fact you mentioned about
a) your mother's health
b) Money complications adding to her stress, and
c) Her actively *wanting* to give the money to you.
For a/b, the issue was much more tenant problems than money. She had a 20-unit building and someone was always calling complaining that "the guy in #3 is playing his music too loud", "I think the girl in #12 is dealing drugs", etc. Now that she has sold that one, her stress level is way, way down. For c, yeah, she's the one who has suggested it several times. The question is really whether I should try to push back and refuse it or just accept it.

47Percent wrote:
Fri Aug 10, 2018 1:14 pm
Also, the information that are missing:
1) Her age
2) Your age
3) Whether you have any siblings.
4) Your net worth & Her net worth.

The last one in the list is necessary, for example in the scenario hers is $500k and yours is $5M, the conclusion may be different than say, hers in $1M and yours is $500k.
1. 73
2. 45
3. No surviving siblings, spouse, or children
4. Closer to the $1M(her)/$500k scenario, not counting the money in question.
4a. I save about 50% of my income and I'm on track to retire comfortably in 10-15 years, so really if she gave me the money and didn't need it back it would probably just shave a couple of years off the time until I'm FI.

Grogs
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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Fri Aug 10, 2018 3:37 pm

vineviz wrote:
Fri Aug 10, 2018 9:49 am
Grogs wrote:
Fri Aug 10, 2018 9:34 am
Are there any other issues that I have missed? Suggestions on which way you would go, or other variables to consider? Thanks!
As far as I can tell, you've covered all the angles.

On balance, I think if I were in your shoes I'd probably "let" your mom give you at least a good chunk of the potential $250k. It sounds like she might be the kind of person who'd derive a psychic benefit from making the gift, so I'd find a way to give her that joy.

I might might also use some of the money to plan a trip or some other fabulous experience with her while her health is still good, and use the rest as you outlined.
I think your sense on this one is correct. She doesn't have any expensive hobbies or like to travel, so I think her natural thought was to give it to me so that I can enjoy it. A really nice vacation for her would probably be a week in a cabin in the mountains, which probably wouldn't cost $1k for both of us. I did suggest to her that giving me more than $15k a year would "cause problems", so she will probably accept that if I push back.

Grogs
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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Fri Aug 10, 2018 3:45 pm

c1over8 wrote:
Fri Aug 10, 2018 12:20 pm
+1 to the poster above who said that if the time comes, mom probably won't want to qualify for medicaid and would prefer to spend her money for care

You say she is safe from estate taxes but haven't given much information about her assets. Will she still be safe if she dies after the increased exemption sunsets?

No one has mentioned it so I'll throw it out there that if you decline the gift and mom decides to marry the pool boy, the pool boy may wind up with this money rather than you.

But I agree with the others that your mom should probably keep the money (or at least most of it).
I definitely don't plan to dump her in a Medicare home, but I was under the impression some of the private homes had graduated payments based on assets. If not then the question of a lookback period is definitely irrelevant.

Barring some major change (like winning the lottery, property values going up 10X, etc.) she will be well below the estate tax exemptions, sunset or no.

And luckily she doesn't have a pool, so at least I'm safe from that one. :D

Grogs
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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Fri Aug 10, 2018 4:12 pm

celia wrote:
Fri Aug 10, 2018 12:23 pm
Is she properly insured? Besides medical, are all her remaining properties insured for the correct amount and does she have liability insurance? With renters in the properties, there is the chance of damage (either from them or from weather) and for being sued if someone falls/gets hurt. She has a lot more at risk than you probably have so needs to have more resources available for all of life's "what if"s.

Why not help her put the extra cash into investments that she doesn't need to think about. Even 10 more years of growth (before she dies) will give you a nice step-up in cost basis. If she has more income than she needs, she could consider giving her RMDs directly to Qualified Charities using QCDs and not have to pay taxes on the withdrawals.
Insurance is good as far as I can tell. She has good "landlord" policies from a large, reputable company. She really sold more properties than was ideal this year -- my guess is she'll be in the 32% marginal bracket -- but she wanted to get rid of the hassle and there were people actively soliciting her to sell to them. My guess is she'll sell the remaining properties over the next couple of years (maybe causing a bit of a repeat of this problem), but after that she won't have to worry about liabilities from rentals.

I see the value in the step-up basis, so that's a big PRO to having her keep/invest the money. She does do QCDs on her IRA, but it's not a huge amount.

Luckywon
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Re: Should I accept a large cash gift from my mother?

Post by Luckywon » Fri Aug 10, 2018 4:16 pm

Seems pretty straightforward. If i were advising you I would say take the money. If I were advising your mother I would say not to give it.

gougou
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Re: Should I accept a large cash gift from my mother?

Post by gougou » Fri Aug 10, 2018 4:52 pm

I am assuming you are the only child here and her money will eventually be yours.

If her income is low it makes sense for her to keep her money. You could manage her money if she is simply investing in some ETF. She will pay less income/dividend/capital gain taxes, and you'll get a step up basis on inheritance.

In fact she should hold onto her rental properties and leave them to you. You will also get a step up basis in those rental properties. Maybe you could consider hiring a management company to deal with those tenants. But I understand you all want to avoid the hassle. Then it is a good idea to spread out the sales to multiple years to minimize the taxes she pays.

prairieman
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Re: Should I accept a large cash gift from my mother?

Post by prairieman » Fri Aug 10, 2018 5:06 pm

We faced a similar situation a while back with my wife’s mother. Ultimately we remedied it by buying a new home together where we both could live - separate living spaces for privacy, but we were there to care for her as she aged. It was wonderful for all of us. I’ll note that the house was entirely in our name and her portion was paid in cash that was gifted to us.
We all lived happily together for five years until she became too frail for this arrangement. Then she spent several months in a nearby nursing home and passed away.
Not sure this could be done in your case but for us it was a win all around:
We could help her downsize and organize her estate long before she passed.
She could spend much more quality time during her last declining years with her daughter and son-in-law.
The house we bought together is far superior to the houses we each sold - so we all benefitted.
She would have needed assisted living without us for a few of those years- so she saved a lot of money and we inherited those savings.
We could keep a closer watch on her and bring her in if something seemed off - which it did a few times.
When she did move to a nursing home, we got her mail and could watch her stuff without having to drive anywhere. It would be ready if she improved enough to move back.
When she passed, her remaining estate, records, and so on were in our house in her living area. It made for a very peaceful and efficient closing of her estate.

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Sasquatch
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Re: Should I accept a large cash gift from my mother?

Post by Sasquatch » Fri Aug 10, 2018 7:35 pm

vineviz wrote:
Fri Aug 10, 2018 9:49 am
I might might also use some of the money to plan a trip or some other fabulous experience with her while her health is still good, and use the rest as you outlined.
+1

My FIL passed unexpectedly but left my MIL in good shape financially. She took her daughters & their family’s to Hawaii one year and Disneyland another. You could see the pure joy in her eyes on these vacations, especially seeing the grandkids playing. She would have never taken these trips on her own. Her health has since declined and the trips would never be possible now.

sleepwell
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Re: Should I accept a large cash gift from my mother?

Post by sleepwell » Fri Aug 10, 2018 9:22 pm

Grogs,

Accept the money from your mother. She wants to give it to you and you sound as if you are going to be a good steward of the money and look after your mother's needs should any arise. Be, in the words of my mother, who was 94 when she died, a "gracious receiver".

Although my mother did not have a lot of money, over the years she randomly would send me checks for various amounts. These ranged from a couple of hundred dollars to $5000. For a long time I would tear up the checks, send her a letter thanking her but telling her that I didn't need the money, and that she should spend it on herself. Finally she let me know that it hurt her feelings for me to refuse her gift. After that I accepted any money she sent, thanked her, put it in a separate checking account, and made certain that all my adult children knew that money was 'Grandma's' (in case something happened to me and they were dealing with my estate) and was to be used for her.

Let your mom do something nice for you. It will make her happy.

FBN2014
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Re: Should I accept a large cash gift from my mother?

Post by FBN2014 » Fri Aug 10, 2018 10:13 pm

Are there any other issues that I have missed? Suggestions on which way you would go, or other variables to consider? Thanks!
Here's an issue that you missed. Your mom is in good health so I assume she is fairly active. She is a prime target for a gold digger who preys on lonely widows. I saw it happen in my own family that resulted in a bankruptcy. A consultation with an estate planning attorney to avoid this would be money well spent.
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Jablean
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Re: Should I accept a large cash gift from my mother?

Post by Jablean » Fri Aug 10, 2018 11:10 pm

Any holdings she has that are TOD or similarly have a beneficiary listed move to the designated person upon presentation of a death certificate. No probate, no executor. In my experience bank or credit unions are very fast while fund companies may take time if you don't use the same company/adviser.

Life Insurance, at least the smaller amounts I received were also very fast paying which was good as we had issues with the will not being found.

Senior Living - the nicer homes may require full payment by someone (you or mom) for three or more years before they'll accept the senior for Medicaid. So you find the place you want to spend your senior years, make sure you've saved at least $10,000 a month for their "buy in" time (or $100,000 a year) and then you/mom can give away amounts above that. (of course still considering Medicaid look back years)

123
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Re: Should I accept a large cash gift from my mother?

Post by 123 » Fri Aug 10, 2018 11:12 pm

Grogs wrote:
Fri Aug 10, 2018 9:34 am
...Her retirement, SS, and income from the few remaining rentals easily cover all of her living expenses, so she's been trying to figure out what to do with the excess.

She's stated several times that she wants to just give the money to me, but I'm trying to decide if that's a good idea...
Pros and cons of transferring the funds to OP have been discussed. But I wonder if behind the generosity there is an (unstated) plea for help with managing her finances. I've assisted a number of older relatives with their finances and once they get up into their 70's (depending on their background and work history) they regard a lot of things like paying bills, balancing a checkbook, and deciding what to do when a CD matures to be major headaches. Only the OP can decide if this is a possible issue. So perhaps the solution is simply to leave the money in her name but step-in and help her with finances. Things like setting up auto-pay on utility bills and consolidating assets (like CDs at different banks into a brokerage account as they mature (then use brokered CDs or Treasuries) can sometimes be hurdles for older folks. Initially they get comfort from still receiving their statements but after a few years she may prefer for you to receive them directly. In relatives I've assisted I would give them a simple spreadsheet of where there money was and they much preferred that.

If there is mutual trust and no potential conflicts from other relatives it could make her life less stressful.
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Re: Should I accept a large cash gift from my mother?

Post by celia » Sat Aug 11, 2018 4:07 am

Grogs wrote:
Fri Aug 10, 2018 4:12 pm
She really sold more properties than was ideal this year -- my guess is she'll be in the 32% marginal bracket -- but she wanted to get rid of the hassle and there were people actively soliciting her to sell to them. My guess is she'll sell the remaining properties over the next couple of years (maybe causing a bit of a repeat of this problem), but after that she won't have to worry about liabilities from rentals.
If your dad died this year, she will be able to file MFJ. After that, it will be as Single (unless she re-marries). Note that the space in each tax bracket for Singles is half as much as it is for MFJ.

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Re: Should I accept a large cash gift from my mother?

Post by corn18 » Sat Aug 11, 2018 8:39 am

When my MIL brought this same topic up to my me and my wife, we showed her our FIDO balance that was bigger than hers and that helped her a lot. She doesn't ask anymore but we do talk about her finances a lot more and discuss things like DAFs and philanthropy. She's old school so she just wants her money to go to her family.

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Re: Should I accept a large cash gift from my mother?

Post by NotWhoYouThink » Sat Aug 11, 2018 8:45 am

She could live another 25 years. Any number of things could happen over that time period that would cause her to need the money. And any number of things could happen over that time period that would cause you to lose the money. Leave it with her. If she wants to give you a gift of a few thousand that's fine, but she is much too young to be transferring that much of her wealth to you.

I know 90+-year-olds who are still taking the stairs, mowing their lawns, driving, learning new things and enjoying travel. Don't count her out yet, and encourage her to continue thinking young. She may still be grieving her husband, but you could help her enjoy this part of her life by encouraging her to look forward.

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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Sat Aug 11, 2018 8:57 am

prairieman wrote:
Fri Aug 10, 2018 5:06 pm
We faced a similar situation a while back with my wife’s mother. Ultimately we remedied it by buying a new home together where we both could live - separate living spaces for privacy, but we were there to care for her as she aged. It was wonderful for all of us. I’ll note that the house was entirely in our name and her portion was paid in cash that was gifted to us.
We all lived happily together for five years until she became too frail for this arrangement. Then she spent several months in a nearby nursing home and passed away.
Not sure this could be done in your case but for us it was a win all around:
We could help her downsize and organize her estate long before she passed.
She could spend much more quality time during her last declining years with her daughter and son-in-law.
The house we bought together is far superior to the houses we each sold - so we all benefitted.
She would have needed assisted living without us for a few of those years- so she saved a lot of money and we inherited those savings.
We could keep a closer watch on her and bring her in if something seemed off - which it did a few times.
When she did move to a nursing home, we got her mail and could watch her stuff without having to drive anywhere. It would be ready if she improved enough to move back.
When she passed, her remaining estate, records, and so on were in our house in her living area. It made for a very peaceful and efficient closing of her estate.
It probably wouldn't work exactly in our case, but I have suggested she should move close to me (like in a condo in my neighborhood where I could walk over). But she's not ready for that yet. Maybe in a few more years. Her house now is actually way bigger than what she needs, so other than needing some cash for the initial down payment she should be able to pay from the sale of her existing house for anything new she moves into.

Sasquatch wrote:
Fri Aug 10, 2018 7:35 pm
vineviz wrote:
Fri Aug 10, 2018 9:49 am
I might might also use some of the money to plan a trip or some other fabulous experience with her while her health is still good, and use the rest as you outlined.
+1

My FIL passed unexpectedly but left my MIL in good shape financially. She took her daughters & their family’s to Hawaii one year and Disneyland another. You could see the pure joy in her eyes on these vacations, especially seeing the grandkids playing. She would have never taken these trips on her own. Her health has since declined and the trips would never be possible now.
Unfortunately she doesn't want to travel. She hasn't been on a commercial airline for 30 years, and I think she finds the prospect too daunting now. She'll probably do something within easy driving distance, but that's about it. She bought a new car (Toyota Corolla) because her old one was a 2001, but she doesn't have a lot of expensive needs (or even wants) right now.

FBN2014 wrote:
Fri Aug 10, 2018 10:13 pm
Are there any other issues that I have missed? Suggestions on which way you would go, or other variables to consider? Thanks!
Here's an issue that you missed. Your mom is in good health so I assume she is fairly active. She is a prime target for a gold digger who preys on lonely widows. I saw it happen in my own family that resulted in a bankruptcy. A consultation with an estate planning attorney to avoid this would be money well spent.
We did this recently when we put together wills, power of attorneys, living wills, etc. so I'm not sure how much more I could do. Things could change, but I find the scenario pretty unlikely right now. I would be more concerned by her getting scammed by "the nice man on the telephone" than anything else. I think that if I invest the money (whether in her name or mine) it's less of a concern because she wouldn't be able to just hand over the username/password.

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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Sat Aug 11, 2018 9:06 am

Jablean wrote:
Fri Aug 10, 2018 11:10 pm
Any holdings she has that are TOD or similarly have a beneficiary listed move to the designated person upon presentation of a death certificate. No probate, no executor. In my experience bank or credit unions are very fast while fund companies may take time if you don't use the same company/adviser.

Life Insurance, at least the smaller amounts I received were also very fast paying which was good as we had issues with the will not being found.

Senior Living - the nicer homes may require full payment by someone (you or mom) for three or more years before they'll accept the senior for Medicaid. So you find the place you want to spend your senior years, make sure you've saved at least $10,000 a month for their "buy in" time (or $100,000 a year) and then you/mom can give away amounts above that. (of course still considering Medicaid look back years)
Thanks, this is what I was thinking about. My neighbor is 80, still in good health, and living at home. Most of her friends have gone into homes, and I thought I remembered her describing something like that arrangement. I need to start paying more attention to what she's saying.

One thing I've thought of with the accounts is what type of records we need to have. Does she need a full listing of all my accounts (e.g., Roth IRA aat Vanguard, account# XXXXXX), or is it just enough to say that I have funds at Ally, VG, Charles Schwab, etc. I'm just thinking that on most of my accounts where I list a beneficiary I only put in a name/birthday/SSN. I don't know how proactive banks and investment companies are with finding/notifying the beneficiaries or if it's more of a "pull" type of process where you need to call the various companies. When my dad died, all of the accounts were joint accounts, so she knew where everything was.

123 wrote:
Fri Aug 10, 2018 11:12 pm
Grogs wrote:
Fri Aug 10, 2018 9:34 am
...Her retirement, SS, and income from the few remaining rentals easily cover all of her living expenses, so she's been trying to figure out what to do with the excess.

She's stated several times that she wants to just give the money to me, but I'm trying to decide if that's a good idea...
Pros and cons of transferring the funds to OP have been discussed. But I wonder if behind the generosity there is an (unstated) plea for help with managing her finances. I've assisted a number of older relatives with their finances and once they get up into their 70's (depending on their background and work history) they regard a lot of things like paying bills, balancing a checkbook, and deciding what to do when a CD matures to be major headaches. Only the OP can decide if this is a possible issue. So perhaps the solution is simply to leave the money in her name but step-in and help her with finances. Things like setting up auto-pay on utility bills and consolidating assets (like CDs at different banks into a brokerage account as they mature (then use brokered CDs or Treasuries) can sometimes be hurdles for older folks. Initially they get comfort from still receiving their statements but after a few years she may prefer for you to receive them directly. In relatives I've assisted I would give them a simple spreadsheet of where there money was and they much preferred that.

If there is mutual trust and no potential conflicts from other relatives it could make her life less stressful.
Day-to-day things, she's fine. I would say she's a good accountant, but not a good money manager if that makes sense. Once she knows what to do and how to do it, she's fine and handles it well, but it's unfamiliar situations that worry her. She's got a pretty good accountant for the rental property side of things, but now that she has a lot of money on the personal side, I think she could use assistance. My dad always ran the properties for long-term investments and monthly cash flow. If he ever had too much money, he just bought a new house and problem solved. When she sold the first batch of properties last year, I counciled her to pay off the remaining mortgages, and it took care of the problems. Now she's selling properties with no mortgages, and getting that money back, so the solution is less obvious. I'll help her out with getting that invested, but it's really just a question of whether I should set things up in her name or mine.

celia wrote:
Sat Aug 11, 2018 4:07 am
Grogs wrote:
Fri Aug 10, 2018 4:12 pm
She really sold more properties than was ideal this year -- my guess is she'll be in the 32% marginal bracket -- but she wanted to get rid of the hassle and there were people actively soliciting her to sell to them. My guess is she'll sell the remaining properties over the next couple of years (maybe causing a bit of a repeat of this problem), but after that she won't have to worry about liabilities from rentals.
If your dad died this year, she will be able to file MFJ. After that, it will be as Single (unless she re-marries). Note that the space in each tax bracket for Singles is half as much as it is for MFJ.
Last year, so she'll be single. It will be a double whammy in that she'll have significantly more income, and will also be filing single.
corn18 wrote:
Sat Aug 11, 2018 8:39 am
When my MIL brought this same topic up to my me and my wife, we showed her our FIDO balance that was bigger than hers and that helped her a lot. She doesn't ask anymore but we do talk about her finances a lot more and discuss things like DAFs and philanthropy. She's old school so she just wants her money to go to her family.
I don't think that would really phase her. She still wants to give me $10 for chinese takeout for the two of us even though she knows what I make. I think it's because her parents were quite poor growing up, and she and my dad struggled pretty hard while I was growing up. One of the joys of having money is giving it away.

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Re: Should I accept a large cash gift from my mother?

Post by retiringwhen » Sat Aug 11, 2018 10:15 am

Grogs wrote:
Sat Aug 11, 2018 9:06 am
I don't think that would really phase her. She still wants to give me $10 for chinese takeout for the two of us even though she knows what I make. I think it's because her parents were quite poor growing up, and she and my dad struggled pretty hard while I was growing up. One of the joys of having money is giving it away.
This.... My grandparents raised 10 kids in near poverty, but he eventually did well as a tool and die maker for a factory. When my grandfather was in his 80s and widowed, my mother took over POA for his funds. He had not realized that he had been living on half of his pensions for 15 years and had over $200K in a non-interest bearing checking account. From then on, he started giving every family member cash every time he saw them. We lived next door. My brother who delivered the newspaper would get $5 every DAY from grandpa. My mother had to put a stop to it since that was more than he was making every week on the rest of the route. :-)

My grandfather was so happy to find he had wealth to share it was a major joy for him.

If she really wants to share her wealth consider the value SHE receives from the gift as well as the most efficient use of the funds. That value can be very important.

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Re: Should I accept a large cash gift from my mother?

Post by Earl Lemongrab » Sat Aug 11, 2018 1:08 pm

Just to be clear, because the OP mentioned Medicare, it's Medicaid. That's state-sponsored charity. Some nice places have Medicaid accommodations. Some might even scale payment for indigent patients. However, you're cutting down the number of opportunities. If I ever have to go into assisted care, I want the best.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: Should I accept a large cash gift from my mother?

Post by Jablean » Sat Aug 11, 2018 3:02 pm

Should your beneficiaries know your account numbers? Yes.
I got my mother's numbers from her filing cabinet. I don't know how people do it who don't at least get year end records in the mail. My mother had all her accounts with an adviser, they were great if I wanted to stick with them and not so much help if I wanted to move things elsewhere. I needed an account number every time I called the main office, especially as we were working with annuities, iras, roths, taxable

Will the firms contact the beneficiary? Some do, some don't
I was tracked down by the bank who said an old form had me as beneficiary for my mom's checking account, then they recanted later and we had to move the money to the estate. The annuities that were part of the adviser firm didn't ever send anything to me but the outside firms they had arranged annuities with did. I called both the life insurance places and/or filled out the web forms.

My mom talked with me about her will and wishes about every other year before they took overseas trips and she kept her old wills so I saw how she transitioned over time. Her adviser kept trying to take me off as beneficiary or had my name wrong so she was always upset with them.

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Re: Should I accept a large cash gift from my mother?

Post by DarthSage » Sat Aug 11, 2018 5:05 pm

They sell workbooks, titled charming ways like "Now That I'm Dead" that you can fill out to provide account numbers, insurance information, etc. While you might not want to shell out the $10 or so, it might be worthwhile to do something like this--have a computer or written file with all the pertinent information.

My MIL died last year, and I'm positive she went to her grave thinking she put the dots close together. It still was a ton of work, untangling everything. It would be helpful for the OP to have this for himself/herself, and possibly to help Mom do something similar. Nothing like life events giving you clarity--not only are we filling out our own workbook and planning a visit to an estate attorney to update our wills, etc., but we've talked to our children about general plans. We have the added wrinkle of a DD23 who insists that, should DH and I die, she will raise her minor siblings. While this is gratifying, it puts a lot of potential weight on her skinny young shoulders.

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Re: Should I accept a large cash gift from my mother?

Post by FBN2014 » Sat Aug 11, 2018 5:31 pm

DarthSage wrote:
Sat Aug 11, 2018 5:05 pm
They sell workbooks, titled charming ways like "Now That I'm Dead" that you can fill out to provide account numbers, insurance information, etc. While you might not want to shell out the $10 or so, it might be worthwhile to do something like this--have a computer or written file with all the pertinent information.

My MIL died last year, and I'm positive she went to her grave thinking she put the dots close together. It still was a ton of work, untangling everything. It would be helpful for the OP to have this for himself/herself, and possibly to help Mom do something similar. Nothing like life events giving you clarity--not only are we filling out our own workbook and planning a visit to an estate attorney to update our wills, etc., but we've talked to our children about general plans. We have the added wrinkle of a DD23 who insists that, should DH and I die, she will raise her minor siblings. While this is gratifying, it puts a lot of potential weight on her skinny young shoulders.
Here is a free resource called the Big Book where you can record every item of information that your loved ones would need when you die or become incapacitated.

http://www.erikdewey.com/bigbook.htm
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Re: Should I accept a large cash gift from my mother?

Post by Steelersfan » Sat Aug 11, 2018 6:13 pm

I have significantly more assets than I will ever realistically need. But who knows what anyone's health future is, and I would never want to be limited to a nursing home that had me as a Medicaid patient. I think it's morally wrong (there's no consensus on that here) when I can pay my own way.

So I gift each of my children four figure amounts each year. The benefits of a step up basis are too great to ignore. As time goes on I expect those amounts will get larger.

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Re: Should I accept a large cash gift from my mother?

Post by pondering » Sat Aug 11, 2018 7:53 pm

Can she provide you a loan at market rates and then forgive the interest payments?
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Re: Should I accept a large cash gift from my mother?

Post by Grogs » Wed Aug 15, 2018 7:41 pm

After being out of town for six weeks, I finally got a chance to sit down with my mother and it looks like the question has worked itself out, at least for now. I talked to her on the phone a few weeks ago, and she mentioned that she had opened another account because of FDIC limits. Apparently she had decided to put a big chuck of the money into an 18-month CD. The rate isn't good (pretty abysmal in fact), and my first thought was to just have her break it and put it somewhere else. After thinking about it for a bit, I decided she would probably take that to mean she had messed up, so I left it alone. I don't think the hard feelings it might generate are worth it to save a few dollars.

So in the short run now, I've calculated that she has more than enough outside the CD to cover the next estimated tax bill, and she'll have plenty left over for emergencies and operating expenses. I think for this year I'll let her gift me $15k (she's still pretty insistent) and again next year if she wants. Once the taxes clear and I have a better picture of excess cash she still has in the bank, I'll start working on a plan to put it into high-yield savings or invest it in a taxable account. When the big CD matures in January of 2020, we'll revisit the question. If she's comfortable with the investments I make for her now, she may be be more inclined to keep it and just invest it for herself at that time.

Thanks for all of your comments and suggestions.

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Re: Should I accept a large cash gift from my mother?

Post by retiringwhen » Wed Aug 15, 2018 8:00 pm

Grogs wrote:
Wed Aug 15, 2018 7:41 pm
After being out of town for six weeks, I finally got a chance to sit down with my mother and it looks like the question has worked itself out, at least for now. I talked to her on the phone a few weeks ago, and she mentioned that she had opened another account because of FDIC limits. Apparently she had decided to put a big chuck of the money into an 18-month CD. The rate isn't good (pretty abysmal in fact), and my first thought was to just have her break it and put it somewhere else. After thinking about it for a bit, I decided she would probably take that to mean she had messed up, so I left it alone. I don't think the hard feelings it might generate are worth it to save a few dollars.

So in the short run now, I've calculated that she has more than enough outside the CD to cover the next estimated tax bill, and she'll have plenty left over for emergencies and operating expenses. I think for this year I'll let her gift me $15k (she's still pretty insistent) and again next year if she wants. Once the taxes clear and I have a better picture of excess cash she still has in the bank, I'll start working on a plan to put it into high-yield savings or invest it in a taxable account. When the big CD matures in January of 2020, we'll revisit the question. If she's comfortable with the investments I make for her now, she may be be more inclined to keep it and just invest it for herself at that time.

Thanks for all of your comments and suggestions.

Good resolution for now. Some times the admonition of “don’t do something, just stand there” can be used to let storms pass in other parts of life too.... you’ll both have perspectives then with the passage of time that may help.

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Re: Should I accept a large cash gift from my mother?

Post by FBN2014 » Thu Aug 16, 2018 8:51 am

Grogs wrote:
Wed Aug 15, 2018 7:41 pm
After being out of town for six weeks, I finally got a chance to sit down with my mother and it looks like the question has worked itself out, at least for now. I talked to her on the phone a few weeks ago, and she mentioned that she had opened another account because of FDIC limits. Apparently she had decided to put a big chuck of the money into an 18-month CD. The rate isn't good (pretty abysmal in fact), and my first thought was to just have her break it and put it somewhere else. After thinking about it for a bit, I decided she would probably take that to mean she had messed up, so I left it alone. I don't think the hard feelings it might generate are worth it to save a few dollars.

So in the short run now, I've calculated that she has more than enough outside the CD to cover the next estimated tax bill, and she'll have plenty left over for emergencies and operating expenses. I think for this year I'll let her gift me $15k (she's still pretty insistent) and again next year if she wants. Once the taxes clear and I have a better picture of excess cash she still has in the bank, I'll start working on a plan to put it into high-yield savings or invest it in a taxable account. When the big CD matures in January of 2020, we'll revisit the question. If she's comfortable with the investments I make for her now, she may be be more inclined to keep it and just invest it for herself at that time.

Thanks for all of your comments and suggestions.
Marcus (Goldman Sachs) website seems to have highest CD rates that I have seen.
"October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May March, June, December, August and February." - M. Twain

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