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How Much Should You Leave Your Kids?
BY STEVE DINNEN
When it comes to your children, and your legacy, how much is enough? Is there a proper amount of money to leave them?
“It’s all over the board,” says Jay Syverson, an attorney in Des Moines who works with trusts and estate planning. In general, though, he says that the majority of his clients leave all of their wealth to their children.
We’re in the midst of the Great Wealth Transfer as baby boomers, the wealthiest-ever American generation, pass along an astounding $68 trillion. You can map out your plan on your own, obviously. Or you can tap into the wisdom of estate planning professionals such as Syverson or Tracy Abbas (pictured), vice president and trust officer at Bankers Trust Co. The first thing they’ll likely want to do is sit down and have a chat.
“The conversation always starts with their goals, what’s important to them,” Abbas says of the older generation’s perspective. “Sometimes it’s difficult to articulate what’s important to them.”
Abbas says the default position in leaving money is to divide it equally among children (though a spouse gets first dibs).
“I like to challenge that and say fair isn’t always equal,” she says. Different children may have different situations—one might be an extremely successful business person, while another may have chosen a career in a lesser- paying profession that has not left them on an equal financial footing with their sibling. Sometimes, Abbas said, a child isn’t especially interested in grabbing an equal part of the inheritance pie.
Owned businesses can complicate matters. Some children may be involved in the business while others aren’t. However that business is carved up, Syverson said it’s typical for children to get it, while liquid assets may go to charity.
Charitable giving certainly enters the picture, more so as the wealth of the giver grows. Charitable giving as an estate planning tool likewise adds complexity, and in such instances children can get involved.
All of which gets back to there being no single answer on how much to leave your children, Abbas says. The one certainty, though, is that the more wealth you have, the more you need to plan on what to leave behind, and the sooner you need to do it. You also need to know it’s a never ending process, that needs to be reexamined every few years since tax laws change, divorces happen, people die.
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Corporations that thrive have a duty to give back to the communities that support them. Consider donating to organizations that impact to your business.
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Giving Money to Your Children Without Tax Consequences
BY STEVE DINNEN
I’ve already set the wheels in motion to transfer my wealth to my children while I’m alive.
Anyone can give anyone else up to $15,000 a year, with no tax consequence to either party. So that’s what I am doing—giving each of my three children that amount, every year. If you’re married, both you and your spouse can give $15,000 to each child, for an annual total of $30,000 (my wife died in 2020, so now I’m capped at $15,000).
I deployed a special gifting method. I opened three stock brokerage accounts, jointly in my name and their names. I make decisions on where it will be invested. Sometimes they chip in ideas. I hope to make these nest eggs grow over time, between capital gains and more annual contributions.
Of course, I could lose money. And I did with the first account (sorry, Audrey), during the pandemic meltdown of April 2020. But I’m a pretty good student of the stock market and have gained back all of that plus some. All capital gains—and losses—show up on their tax returns.
My children have ultimate control over the money. Yes, they could tap into it now, without my consent. But then somebody might wind up with a lump of coal in their Christmas stocking.
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Can You Trust Zillow's 'Zestimate' Home Values?
BY SAMANTHA SHARF FOR MONEY.COM
Americans love the Zestimate, but Zillow's latest business problems suggest you should think twice before using the popular home value algorithm to make any big real estate decisions.
Zillow announced Nov. 2 that it leaving the home-flipping business after three years. The decision raises questions not only about the company's future and the state of the housing market, but also about how good the company is at predicting home prices. The critical question for homebuyers and sellers: Can you trust the Zestimate?
Home price predictions have always been a big part of Zillow's appeal. When Barton and his co-founders launched Zillow.com in 2006, the “Zestimate” was a Hail Mary. Their original idea to auction houses floundered, so they cooked up a plan to estimate the value of every home in America. It drew so many people on day one that the site crashed.
Today, the company publishes value estimates for 104 million properties and the Zestimate is featured prominently on home listing pages across the site. However, questions about the Zestimate have plagued ZIllow from the start. READ MORE.
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U.S. Treasury I Bonds to Earn Annual Rate of 7%
BY ISABEL CONTREAS FOR FORBES.COM
At a time when investors worried about inflation are considering putting money into everything from Bitcoin to commodities, there’s an old fashioned—and uber safe and simple—way to keep at least some of your cash from losing value: U.S. savings bonds.
The U.S. Treasury announced Nov. 1 that I bonds issued between now and the end of next April will earn interest at an annual rate of 7.12% over the first six months after purchase. That’s the second-highest initial interest rate ever for these bonds.
You can purchase digital series I bonds on the U.S. Treasury's Treasury Direct website, with a minimum investment of $25, and a maximum of $10,000 per calendar year, per Social Security number. (So a couple can buy $20,000 worth.) You can cash your bonds after a year, but you’ll lose three months' worth of interest if you cash out before you’ve held them for five years. Or, if inflation persists, you can choose to continue earning interest over the next 30 years, compounded semiannually, with the rate reset every six months. READ MORE.
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