Personal Finance
I'm 62 and worth millions - how can I give more to my kids without getting slammed on taxes?
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Benjamin Franklin is famous for many things, including the following quote: Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
Death and taxes are two dreaded topics that are closely aligned. Their confiscatory premise is a continual source of perceived injustice and strategic planning to find a workaround or loophole to give more to family members without government pilferage. Gift taxes were created by Congress and the IRS to serve as a deterrent to those seeking to give funds to family before their demise, when estate taxes (i.e., Death Taxes), would apply to the existing estate’s total worth.
Dave Ramsey is the host of a syndicated radio show about financial advice. He recently addressed the topic of gifting when a caller wanted to give a large sum to his son-in-law for growing his business without triggering gift taxes.
Ramsey concurred with and preferred the caller’s plan. As an alternative choice, he suggested the following:
My personal experience in small business finance concurs with both the caller’s and Ramsey’s plans and comments. Perhaps the only additional consideration to add might be to structure the deal like a venture capital financing if the son-in-law’s expansion plans involve taking on future investors or a buyout offer from a larger competitor down the road. The caveat, however, is that the payments would trigger a 1099 tax for the caller. This would be the following:
This article is intended to be strictly informative and opinion-based only, and not construed to be tax or financial advice. It is advised that professional tax and financial counseling be sought before undertaking any steps in that field.
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