SMART MONEY: Couple plans to reduce estates by gifting son
DEAR BRUCE: Am I correct in understanding that anyone can give up to $14,000 per year to anyone else without it counting toward the federal estate exclusion? My spouse and I are both retired and are considering gifting annually to our adult son (age 25) to begin reducing our estates.
Does the gift have to be given directly to the individual, or can it go into a trust for that individual? We are concerned about our son having access to it immediately, given that in five years it could be $140,000 (or more, as the allowed amount rises over the years), if we both make maximum gifts. We would like to consider a trust where we could specify parameters for its withdrawal/use, if that is allowed. — Mike, via email
DEAR MIKE: You are correct. A relative or anyone else can be gifted as much as $14,000 per year without any tax impact. Since both you and your wife are thinking about giving annually to your son, that would be $28,000 a year.
The gifts may be put into a trust. That would require the help of an attorney who is skillful in the matter of trusts. You can give reasonable parameters to when the money will be paid and how.
As for its use, that’s a different problem. I think sooner or later you are going to have to decide either that your son is capable of handling the money, or designate a trustee who will distribute the money in accordance with your wishes. Keep in mind that the more complicated this becomes, the more likely it is to end up in litigation at some time, which I think you would like to avoid.
DEAR BRUCE: Why do companies rely on credit scores when the scores are always wrong? I checked mine one year and found there were reports from companies I did not do business with. It took me almost six years to get it straightened out.
Recently, I checked again and found the same thing. When I contacted the credit score companies, they would not believe me; they took the word of the companies reporting it. Why? Everyone I talk to says their scores are wrong also. — F.H., via email
DEAR F.H.: I don’t agree that the scores are always wrong, but they can be. I, like yourself, have found reports from companies I haven’t done business with in many years. Why it took six years to get yours corrected is another question.
The credit score agencies won’t believe you, but take the word of the companies reporting because agencies have little to gain by being completely accurate. The fact remains that credit scores are a strong criterion used when you are applying for credit. That’s the reality.
You should check your credit scores from time to time, but keep in mind that changes of 10 to 15 points in either direction are not going to make a whole lot of difference.
I understand your frustration as I have experienced the same frustration when I wanted something corrected. It required numerous pieces of correspondence. But that’s the system, and there’s little we can do about it except go with the flow.