A Question re: Family Trust Gifting, Please...

[Don Ro]

Originally Posted by HiBeam

I can surely see why you do not trust her - I wouldn't either! How on earth did she become the trustee?

By manipulating the pants off our parents for years and years.
I witnessed it many times and I knew what she was doing.

[recycled sixtie]

Originally Posted by Don Ro

By manipulating the pants off our parents for years and years.
I witnessed it many times and I knew what she was doing.

Nobody ever said life is fair. You have my sympathy.
Guy

[911SauCy]

Ever think your sister made that change herself and is skimming the difference from you and your other siblings?

My mother happens to be the ultra manipulative sister that's close to solely responsible for almost no inter family communication. I always wondered what everyone's problem was, now 10 years removed...it's very clear.

Good luck

[jwasbury]

Originally Posted by widgeon13

I believe that assets can be gifted as well but I'm not sure if there is a change in the cost basis (bump up to date of transfer) or if it stays the same as when it was purchased in your mother's portfolio. That would be a question to ask an accountant familiar with these situations.

^inter vivos gifts of property (marketable securities, for example) are certainly allowed. The recipient takes the property with the same basis as the giver (known as carryover basis)...said another way, you do not get a step-up in basis to fair market value.

Assuming the RLT has the assets, sister/trustee could have gifted up to the maximum allowable under the annual exclusion. Assuming she is telling the truth about the reason behind the smaller than usual cash gift, any stock received would have a "built-in capital gain" - OP would have to pay capital gains tax upon sale of stock.

[berettafan]

The gift exclusion can apply to EVERYONE you know. That is to say she could give $14k to you, your kids, your spouse, your gardner, your HVAC guy, etc etc etc.

In any event my guess is investments had to be liquidated to create the cash to hand out. Doing so certainly could create cap gains.

All that being said you should almost never have a problem paying LT cap gains tax. It is the cheapest tax there is.

Gifting the actual holdings would cause you to have her basis in the holdings. Thus YOU would be subject to the cap gains tax if they were sold at a price higher than her cost basis. You, as a family, could manage this by simply looking at the beneficiaries tax situation.

IOW it may be preferable to pay the cap gains tax on your mom's 1040 or on your 1040....depends on the tax situation.

Additionally you want to consider that IF your mother does not have a taxable estate it could be advantageous to let as much of her assets as possible pass through her estate (after she passes away) so you get the step up in basis and thereby no cap gains tax on sale of the securities (assuming sold at same price they are valued at on date of death).

This is all subject to your own state laws which I don't know about and could have significant impact.