Inheritance
Hi Terry,
Our family doesn’t want our parents to pass away and they are both in great health.
I know this is a touchy subject but my brother is under the understanding that if we get an inheritance from our parents that it is not going to be taxed. There is approximately 10 million in stocks and then their house is worth about $600,000. They are in their late 80s. We are taking great care of them but when he brought up the money he got upset when I explained the taxes. Can you please explain this? Who is right?
Terry Says
Your brother is correct — under current Federal law, where $13.9 million. But if your parents reside in Illinois, YOU are correct, because Illinois taxes estates over $4 million at rates that quickly rise to 16%!
Here’s what’s important. Your parents should have a current estate plan, preferably a revocable living trust (with stocks put in the name of hte trust) and have named beneficiaries for all their IRAs, and have healthcare powers of attorney and a living will (end of life care instructions).
Here’s a video I created to explain all that:
https://www.terrysavage.com/wp-content/uploads/2022/10/Terry-Talks-Wills-Trusts-Estate-Planning.mp4
And if you don’t have an estate planning attorney and they live in Illinois, they should contact Kerry Peck at PeckRitchie, who specializes in these issues.
With this size estate, your parents should get the work done — and then call a family meeting to explain (generally, not specifically) how they have planned and what to expect. It’s simply nuts for adult children to sit around debating these issues, over which they have no control!
