Generation Skipping

Financial Planning Estate Planning and the Fool
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In my family grand nieces and nephews are likely to inherit nicely but not until age 70 or so.

I’d like to see them get down payments in their 30s. What is the best way to do that?

I thought about a 20 yr annuity paying $50K/yr. Principle required I calculate at $550 to $600K each. Funding that would incur major income taxes (from selling at capital gains rates). (Better to let them inherit tax free.)

Direct gifts of stocks would be best. Annual exclusion is $16K per person this year. Lifetime total exclusion is $12+MM. Requires filing Form 709 annually for record keeping but no tax due (but exclusion might be reduced in the future).

Gift tax and generation skipping tax apply at up to 40% if limits are exceeded.

Am I missing anything?

What is the best solution to this problem?

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I’d like to see them get down payments in their 30s. What is the best way to do that?

Direct gifts of stocks would be best. Annual exclusion is $16K per person this year.

IF you are married and IF your grand nieces/nephews are married, you could gift up to $64k/year. You gift $16k each to N/N and their spouse then your spouse gifts $16k in like manner. And you could kick off the New Year by doing the first gift on December 31 and the next on January 1. So $128k taken care of in a couple days.

Of course the non-married grand niece/nephew might have beefs.

JLC

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