It may be that OP and his sister's marginal tax rates are so materially different (hers does not have to be zero now BTW) - and likely to be materially different almost no matter what happens when the 2017 tax cuts sunset - that there could be net savings between the two of them by trying to structure the split in a more tax friendly way. OP seems more than willing to keep her whole (could even make it somewhat more attractive for her) by way of a gift after the fact. It is not her giving up something for nothing.Even the extremely smart people on bogle heads constantly get deferred income and estate planning wrong. The true experts know that we cannot know the future, only try and ameliorate its worst outcomes.
No, I still stick by my original statement. He's trying to get sister to take a lesser valuable asset in exchange for essentially nothing.
Either way, you're welcome to disagree. The interpretations are opinions, not statements of fact.
Ouch!
For what it’s worth, I think my sister is a sophisticated person who would be able to understand the implications and decide for herself if this is a good idea.
You’re right that $100k in income may well push her into a tax bracket where this makes no sense for her. I hadn’t thought of that.
And I do see your point that I’m way overconfident in projecting everyone’s tax situation 10 years out. Enough could go wrong here in the future that’s it’s a bad idea.
If she’s in the zero income bracket now, she probably won’t be forever. It’s unsustainable.
An IRA is accurately viewed as a ticking tax bomb. Half the IRA is going to be fifty thousand of income per year for ten years not accounting for growth and not accounting for dividends from the other half a million she’ll be receiving.
I don't see this as so awful. It is tricky I get that, but not an attempt to screw her.
I agree with marcopolo that this could make sense depending on their specific circumstances.
Statistics: Posted by MikeG62 — Mon May 06, 2024 8:08 am — Replies 37 — Views 2075