investment account inherit or gift it.
My dad has an investment account with Edward Jones that is listed as a single account with assets made up of stocks and mutual funds totally approximately 90K. I am POA, and use this account to cover his expenses that SS and his pension do not. This account took a significant hit with the market downturn. Is it better to sign this account over into my name now or wait and inherit it through the terms of the will? I plan to let the account sit and recover as the economy improves, but I will have to turn half over to my brother upon dad's passing. My brother will most likely want to sell for cash. What are the tax ramifications and legalities? Thank you.
Re: investment account inherit or gift it.
If Dad is in good health my first choice would be to consider an irrevocable protector trust created by Dad. Done properly, that would have the fewest tax ramifications and would protect any future appreciation. I would apply that to both the investment account as well as for the house, although I would probably use 2 separate trusts...one for the house, and one for the investments.
First question is going to be what does Dad wants to do? Second question is going to be, if Dad cannot make the gift himself, then does the POA includes sufficient gifting provisions to accomplish gifts if Dad is not able to make the gifts himself?
I generally start with trust planning rather than advising gifting directly to children now that the DRA rules are in effect and a trust has significant tax and protection advantages. You need to work with an experienced elder law attorney in these matters, who is comfortable with irrevocable trust planning.
If Dad is not in good health, then gifting may not be the right answer, or it may involving gifting part of the assets. Gifting will create a one month penalty for Medicaid eligibility, if Dad applies for Medicaid for nursing home care any time within five years after the gift has been made.
If Dad is in ill health, I would also want to know if he is a wartime veteran, since there may be valuable benefits available to him as a result of his service and current expenses/care needs.
Best regards, Dennis
