Gift to parents for step up basis

[triad]

Does it make sense to gift my parents money so they can place it in a taxable account?  The idea being I'd inherit it with step up basis in a few decades.   I could do 28k/yr and my fiance could match it.  Does this make sense as a way of saving after maxing out my retirement account?  Risk is that my parents spend it instead of giving it back to me but I can't think of any other downsides.

[ENT Doc]

Interesting tactic, however, do you not have any better uses for $56k a year?  Aside from the risk you mentioned (you'd really want them on board with this plan obviously and need to make sure they won't have a total inherentence in excess of the estate tax exemption) someone has to pay taxes on the taxable account.  Personally I think I'd have a hard time approaching my parents about this plan - using their waning years to provide me with a monetary gain.  If they approached me with that plan I might be more on board.  Might.

[jfoxcpacfp]

triad wrote:

Does it make sense to gift my parents money so they can place it in a taxable account?  The idea being I’d inherit it with step up basis in a few decades.   I could do 28k/yr and my fiance could match it.  Does this make sense as a way of saving after maxing out my retirement account?  Risk is that my parents spend it instead of giving it back to me but I can’t think of any other downsides.

Click to expand...

nimo, too many risks. Your parents may outlive you, if you have siblings, there could be unexpected consequences if the LWT is not drafted correctly and there could be hard feelings if it is, the rules on stepped-up basis may change (and are being discussed), your parents may be sued and lose your money, they may buy bonds with it (  horrors!), they  may live much longer than you expect and you wouldn't have the money when you need it, they may go into a nursing home and Medicaid could take it. I thought of this list in less than 3 minutes. I am sure there are many other reasons not to do this.

Taxable accounts are a good thing to have. Who knows, your own children may inherit the taxable account from you and benefit from the stepped-up basis. Hard to predict what will occur between now and the end of your plan. I wouldn't monkey with this idea.