My father is a cantankerous millionaire and hoarder. He cut my sister out of his will after a blazing row. How can I help her — without incurring a huge tax bill?

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Dear Quentin,

My 75-year-old father is an eccentric hoarder who is thrifty to a fault.

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He retired a multi-millionaire after a distinguished business career, but still wears worn-out shoes, and “shops” at county dumps. He is quarrelsome and argumentative, and does not always make good decisions for himself.

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My sister and I worked together to manage it for many years, but they had a rift that didn’t seem like it could be fixed. Dad threw a big fit and made a big, public, deal to reject it and write it off of his own accord.

This treatment was inappropriate. She was trying to help him while they were arguing and she is still helping me with planning for his care and dealing with his hoardings. When he is near, assuming that I live in his grace, his great fortune is about to come to me.

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I still think it would be best to share it with my sister. Assuming we’re not going to get any help from Dad to set up something, how can I do it without him? Thank you.

favorite daughter

dear favorite,

Sometimes it is difficult to avoid such conflict, even while acting in the best interest of an individual. Sooner or later every member of the family will become a victim of that person’s anger. Often, it goes back to childhood and has little relevance at this time. Still, it will be hard for your sister not to take the broken relationship with her father personally.

Gifting of property to her sister would not entitle her to “step-up” income tax basis. If, for example, you gave her a property that was purchased for $400,000 and when you gift it to your sister, it is worth $500,000, it will be taxed on the total fair market value of the property. Heirs, on the other hand, are usually given a “step-up” on the basis, and are taxed only on the appreciation.

You can allow your sister to oppose the will, assuming that your father hasn’t explicitly stated that he doesn’t want to leave anything to her in his will, and apparently has to fight any legal challenge. do not select the option. This would be the most straightforward and tax-efficient approach. If she is not mentioned in the will, she can make a legal case for your father to be “forgotten” in his will.

In New York State, those legally standing to elect a will include “persons who would have inherited a greater amount if there had not been a will and the property was distributed under the laws of the intestacy of New York” and/or “Persons who would have inherited more under a previous will,” according to the law firm Landskind and Ricafort,

According to the law firm, the reasons for challenging the will also included: “the omission was accidental”. [assuming your father does not mention your sister], Will is not a valid legal document. The descendant lacked the mental ability to sign the document. The will was signed under pressure or undue influence from another party. A later will has been discovered. Granted, the latter is unlikely.

,Transferring millions of dollars to family members over their lifetime is a complicated and treacherous process.,

It is best to gift a large sum of money with the help of a tax advisor, especially when there are multi-million dollar transactions. You can give up to $11.7 million over your lifetime, free of federal estate taxes. You can gift up to $15,000 as an individual or up to $30,000 annually as a couple to multiple parties without paying gift taxes or paying gift taxes to the recipient.

Most educational expenses are not covered by Internal Revenue’s lifetime gift tax allowance, and you can contribute directly to an individual’s medical expenses without qualifying as a gift. turbotax is More information about gifts which are subject to tax. These would include cheques, adding your sister as a joint tenant in the real estate, canceling her indebtedness or paying off your sister’s debt.

As Tax Guy Bill Bischoff of Businesshala explains, transferring millions of dollars to family members over their lifetime is a complicated and treacherous process. One of the many options is a grantor retained annuity trust, an irrevocable trust that discounts the value of assets to fund the trust as annuity payments are subtracted from the overall value.

“The trust then pays you an annuity equal to the IRS-specified interest rate you multiplied by the value of the gift at the time of the trust’s inception,” Bischoff writes. “When the trust is terminated, the beneficiary of the trust (the object of your generosity) receives the remaining trust assets free of any gift or estate tax.” The typical duration of GRAT is around two to five years.

Sometimes, the best qualities of people in business — directness, single-mindedness — are what tend to crop up in personal relationships. Try to let your father know that your sister loves and misses him – assuming she feels the loss of his presence in her life, despite his many emotional ups and downs – and that this world It is better to leave with an open heart and a clean slate as soon as you enter.

You can email The Manitist at [email protected] for any financial and ethical questions related to the coronavirus, and follow Quentin Fotrell Twitter.

check out The Maniast Private Facebook Group, where we seek answers to life’s most thorny money issues. Readers write to me with all kinds of dilemmas. Post your questions, tell me what you’d like to learn more about, or peruse the latest Manifest column.

Dhani is sorry that he cannot answer the questions personally.

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