Sully Dog said:
TxAg20 said:
You can also "loan" money and forgive the loan at a rate of $15,000 per year.
How does that work in terms of death? If I have stage 4 cancer and I loan my daughter $1,000,000 how does that work when I pass away?
Deathbed loans are pretty much always a bad idea. Very limited potential advantage over a gift, many disadvantages.
Typically the loan is still due, and now the estate may be held open due to said loan, among many other potential problems.
Self Cancelling Installment Notes (SCINs) are a very handy structure for intra-family loans, and can include forgiveness at death of lender. There could be some theoretical tax arbitrage here when there income event is recognized, but it is a grey area and high potential for IRS contesting, IMO.
Generally for a loan to make sense (vs gift) it needs to be efficient for the family. Is it improving yield for lender and terms for borrower vs other oppty? Is it getting $ from low risk older family member to higher risk seeking younger family member moving future grow out of High net worth older family member's estate? Things like this are a good reason for loan vs gift, but they typically take time to reach full benefit/potential.