Gifting Dinars to Family, Relatives, etc.

[quattro1]

My wife and I recently bought more Dinars from Ali with anticipation of the impending RI/RV in hopes that we could "help" some family members -- mainly my sister-in-law who works for my wife in their accounting dept.

Here's the question(s) ... in your opinion (realizing that probably none of us are Tax Attorneys, and none of us can hold anyone to their "opinion" ...

1. What is the best way to "gift" dinar to relatives? Before RV or after? Is a notary necessary? Should I give the physical Dinar to them in advance of the RV?

2. What is the best way to pass along wealth to your kids? (I've read many discussions on Family Trusts, 501c3's, and Dividend Paying Whole Life Insurance Policies) -- but, from my searching the DV database, I can't see where this discussion has been addressed more recently.

Any advice would be greatly appreciated -- hopefully not just for myself, but many of the DV family.

THANK YOU in advance and God bless!

Quattro1

** Mods -- please forgive me if I posted this in the wrong area.

[sixstring516]

I posted this a couple months ago, hope it helps.My Uncle is a CPA for a large casino company here in Las Vegas......he informed me of 2 ways to gift without being subject to the tax( if you dont want to give physical dinars)...

1) You are eligible to give $12,000 per yr(or $24,000 married couple) without paying any tax

or if you want to give large sums, I would go this route

2) every american has what they call a lifetime gift credit of one million dollars, meaning you may give up to one million dollars in your lifetime as a gift without having to pay taxes( example I want to give my mother 300,000, so post RV, I tell my tax guy to take $300,000 off my lifetime credit and he will give me the specific form to fill out to do so, so next yr my lifetime credit will be adjusted to read, I only have $700,000 available to gift in my lifetime.....its a little loophole not many know about but its totally legit...hope it helps!

[ThePhantomRider]

Def want to talk to a tax advisor on this one.

I do know that if you want to leave a large gift to a grandchild or even children (outside of what you might want to give them in cash once RV happens) is to leverage it in some sort of family trust. Now most have limits on what you can contribute to those trusts (such as generation skipping trusts) however, there is no cap on what the amount can grow to once the funds are deposited in the trust.

So to simplify things, (again check with a tax advisor or CPA) say the limit on a generation skipping trust is $100k. You could take that 100k, purchase a guaranteed universal life insurance policy and pay the 100k in a lump sum which, depending on age and health, could generate 2-5 times that 100k amount that would be gifted to the beneficiary tax free. Typically the initial premium has already been taxed but there may be ways around that as well.

All I know is that when RV occurs, everyone should consider purchasing life insurance as a means to cover any future estate tax ramifications. There is no better way to leverage money and receive benefits tax free.

Case in point: A prominent businessman we are working with is looking to create an income stream for himself and his wife for their lifetimes. They have 15 million in a retirement acct. They will use 12 million to purchase some sort of annuity to pay them income for life, and use the other 3 million to purchase a $15mil life policy to replenish the retirement account tax free that will be passed on to their heirs. That's 15 million for a 3 million purchase price. Get the picture?

Hope this helps a little.

TPR

I posted this a couple months ago, hope it helps.My Uncle is a CPA for a large casino company here in Las Vegas......he informed me of 2 ways to gift without being subject to the tax( if you dont want to give physical dinars)...

1) You are eligible to give $12,000 per yr(or $24,000 married couple) without paying any tax

or if you want to give large sums, I would go this route

2) every american has what they call a lifetime gift credit of one million dollars, meaning you may give up to one million dollars in your lifetime as a gift without having to pay taxes( example I want to give my mother 300,000, so post RV, I tell my tax guy to take $300,000 off my lifetime credit and he will give me the specific form to fill out to do so, so next yr my lifetime credit will be adjusted to read, I only have $700,000 available to gift in my lifetime.....its a little loophole not many know about but its totally legit...hope it helps!

Good points. Apply the life insurance factor I described below and leverage that 1 million gift up to 5 times. May have to wait for a payday but you could def use a portion to do this.

TPR

[sallygal]

"Annual Gift Tax Exclusion Amount for 2010, 201167

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By frankellis

What is the Annual Gift Tax Exclusion Amount?

Each year you are able to give away money or property in the form of a gift. These gifts will be nontaxable as long as they are below the gift tax limit amount allowed by the IRS.

Gift Tax Limit 2010 Amounts

If you file as single, you may give up to $13,000.00 to each individual you choose to gift. This annual gift tax exclusion amount applies to each gift, not to a grand total of all gifts.

If you file married, then you may gift up to $26,000.00 to each individual you choose to gift. This annual tax exclusion amount applies to each gift, not to a grand total of all gifts.

There Are a Few Guidelines to Ensure Your Gift is Nontaxable:

The gift amount cannot exceed the annual gift tax exclusion amount during one calendar year.

If you have paid for someone else’s education expenses, then no matter how large the amount, this will remain nontaxable.

Your gift will remain nontaxable if you gave it to your spouse or a political organization.

You may need to file a gift tax return under certain circumstances. To file a gift tax return you will need to use Form 709.

If you have given gifts that are larger than the gift tax limit amount, then you will be responsible for the tax on the remaining gift amount. If you are married, then you will need to share the amount of that tax that is due on the gift amount.

If you are the recipient of a gift, then you will not need to report this on your return as long as it is considered a true gift and not any type of payment. If the gift produces income such as stock or a business, then you will need to pay tax on the income earned.

Learn more about the annual gift tax exclusion amount here: Understanding The Federal Gift Tax Exclusion Laws."

Link: http://hubpages.com/hub/Annual-Gift-Tax-Exclusion-Amount-for-2009--2010

[muleman]

Def want to talk to a tax advisor on this one.

I do know that if you want to leave a large gift to a grandchild or even children (outside of what you might want to give them in cash once RV happens) is to leverage it in some sort of family trust. Now most have limits on what you can contribute to those trusts (such as generation skipping trusts) however, there is no cap on what the amount can grow to once the funds are deposited in the trust.

So to simplify things, (again check with a tax advisor or CPA) say the limit on a generation skipping trust is $100k. You could take that 100k, purchase a guaranteed universal life insurance policy and pay the 100k in a lump sum which, depending on age and health, could generate 2-5 times that 100k amount that would be gifted to the beneficiary tax free. Typically the initial premium has already been taxed but there may be ways around that as well.

All I know is that when RV occurs, everyone should consider purchasing life insurance as a means to cover any future estate tax ramifications. There is no better way to leverage money and receive benefits tax free.

Case in point: A prominent businessman we are working with is looking to create an income stream for himself and his wife for their lifetimes. They have 15 million in a retirement acct. They will use 12 million to purchase some sort of annuity to pay them income for life, and use the other 3 million to purchase a $15mil life policy to replenish the retirement account tax free that will be passed on to their heirs. That's 15 million for a 3 million purchase price. Get the picture?

Hope this helps a little.

TPR

Good points. Apply the life insurance factor I described below and leverage that 1 million gift up to 5 times. May have to wait for a payday but you could def use a portion to do this.

TPR

What if the Life insurance company goes broke? It could happen theirs no guarantees in life . ( Your out the three million )

[The Kid]

I posted this a couple months ago, hope it helps.My Uncle is a CPA for a large casino company here in Las Vegas......he informed me of 2 ways to gift without being subject to the tax( if you dont want to give physical dinars)...

1) You are eligible to give $12,000 per yr(or $24,000 married couple) without paying any tax

or if you want to give large sums, I would go this route

2) every american has what they call a lifetime gift credit of one million dollars, meaning you may give up to one million dollars in your lifetime as a gift without having to pay taxes( example I want to give my mother 300,000, so post RV, I tell my tax guy to take $300,000 off my lifetime credit and he will give me the specific form to fill out to do so, so next yr my lifetime credit will be adjusted to read, I only have $700,000 available to gift in my lifetime.....its a little loophole not many know about but its totally legit...hope it helps!

Sixstring ...

In the example you gave, you would have already had to pay taxes on the amount that you are preparing to give your mother, she just doesn't have to pay gift taxes on the $300,000.

I concur with the "ask a tax advisor" recommendation. You have the opportunity to give more if you give pre-RV. That said, your gift amount would be effectively what you paid. However, when the recipients cash-in, they could very possibly have income tax consequences. Each situation stands on it on merits or facts. It is very difficult to generalize without knowing the particulars of the situation.

[ThePhantomRider]

What if the Life insurance company goes broke? It could happen theirs no guarantees in life . ( Your out the three million )

Great question. When a life insurance company issues a policy, there is another policy issued to cover THAT policy. Like your homeowners insurance, they bet you don't use it, we pay a premium to cover a potential expense we could not normally cover. It's called reinsurance. Every carrier uses reinsurance to cover their potential losses and they have to have enough in reserve to also cover the debt.

So if a carrier were to go belly up, all policies are still in force and payout guaranteed as stipulated by the contract.

The big key is this, many of the largest corporations in the world are insurance companies. Reason being is that only 12% or so of the death benefit proceeds are ever paid out. This is due to policy cancellation, policy lapse or term policies that expire. Roughly 88% of the time the simply make money from the premiums without having to payout. Pretty good margin.

Another thing I tell people is to look at history, find me one company that has failed and then failed to pay out a life claim. You get a big gold star if you can. When Conseco failed, no policyholder ever lost coverage. When CNA closed shop, all their policies were honored by SuisseRe. Just ask Gene Simmons, Paul Stanley, Reba McIntyre and Madonna's financial advisor. They all have existing policies through CNA and all are still in force....We wrote them through our old firm. Gene and Paul each have 2 million key man insurance payable to "The Kiss Corporation".

TPR

[ArabMoney]

good info @ quattro

ive been googling around and this will be one of my options...

http://www.youtube.com/watch?v=nTAd-j-KIDw

Edited December 29, 2010 by ArabMoney

[Ttatb227]

good info @ quattro

ive been googling around and this will be one of my options...

http://www.youtube.com/watch?v=nTAd-j-KIDw

Is this legal????

[ArabMoney]

Is this legal????

well i googled around & looked at IRS & you are allowed to gift...

Private gifting is a concept embraced by private groups of individuals and has been in existence for many years. Our private activity does not involve network marketing, multi-level marketing, or a business activity. There are no business transactions, investments and/or securities involved in this activity. There is no business or company name or location and there are no directors, officers, shareholders or principals. Individuals simply support each other in a team concept and help change lives.

Giving private gifts to one another is an expression of kindness, which has been going on for centuries. Governments have allowed its practice for individuals to share their wealth with families, friends and others. It has been a means of helping and blessing others on special occasions or when the need arises.

Many cultures gift as a matter of course. Asian, Jewish and South American communities gift individuals within their culture on a regular basis so that they may start a business or buy a home. They in turn gift someone else to help enhance their lives. Habitat for Humanity is a great example of private gifting. Everyone participates with their time, their talents and materials to build a home for someone else. Some participate with a hammer, some with nails, some with food and others with the monetary gifts to purchase the supplies, but all create a team that works together to bless someone’s life.

Is This Legal?

The concept of private gifting is based upon the fact that both American and Canadian citizens have the Constitutional right to gift property, cash and other assets, and are subject to the rules and regulations established by the laws. The U.S. gifting rules are found in the IRS Tax Code, Title 26, Sections 2501-2504 and 2511.

Edited December 29, 2010 by ArabMoney