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August 30, 2019


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Donna Connolly

This is excellent information, Syd, and very thought-provoking -- especially about the reverse-mortgage.


Donna: Thank you--it provoked my thoughts too!

Tom at Sightings

But if I read this correctly, this only applies to people with more than $11.4 million in assets, or $22.8 million if they're married. Which seems like a lot of trouble to go through just to make your undeservedly rich kids even richer!


Tom: Nope this post applies to everyone. Let's stipulate that basically no one pays the estate tax--and if they do, I doubt they are reading my blog! This post was for everyone else.

This is income tax (capital gains tax) I'm talking about. Which everyone pays when they sell appreciated assets while they are alive. But if you don't sell those assets (stocks or, in this case, your house), you don't pay income tax. Then when you die, your heirs inherit that appreciated asset with the built in capital gains that completely escape tax (because you didn't sell it and your heirs can sell it the day you die with no capital gains tax.)

Presuming you may have needed some of those assets to live on while you were alive: If you borrowed against the assets (instead of selling them and paying the tax, and living on what you netted after tax) you will leave a larger estate to your heirs. Instead, your heirs will inherit the appreciated asset, pay zero capital gains tax, pay off the loan that you used for living expenses, and come out ahead. (Unless the interest cost totals more than the avoided tax and the appreciation you held on to--that's why you have to run some numbers.)

If you are just going to live in your house until the day you die and live off your other assets with no problem, there's no point in doing this--your kids will inherit your house with the step-up in basis and pay no tax anyway.

A lot of words, not sure I delivered any more clarity . . .

Janis @ RetirementallyChallenged

Interesting info. We plan to spend everything we have and die penniless. If there is anything left over, it will go to our local public broadcasting station. Not having kids makes so many things easier :)


Janis: That's about what our plan is--except it's the local jazz center and the SPCA instead of PBS.

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