"Glenn Sweet" <glenns00[at]pacbell.net> wrote in message news:<VwFkb.1565$sC4.361[at]newssvr25.news.prodigy.com> ...
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There are no federal taxes for inherited money. I don't believe that
California has a state tax either. Estates CAN be taxed, and although
the federal law on taxing the estate is fluctuating over the next
decade, definitely anything under 1 million won't be taxed at all.

Taking possession of her house before her death would have negative
impact for you. If you are gifted the house, you get her basis in the
house. In other words, if she paid $200,000 and you sell it for
$450,000, you'll pay taxes on the $250,000 profit (calculating your
m-i-l's basis is actually a bit more complicated, but you get the
idea). If you wait to inherit it at her death, you get a "step-up" in
basis, so that you would pay no taxes if you sell the house for what
it was worth when she died.

California does have a reputation as having a difficult probate
process, so it may be worthwhile to set things up so that her assets
pass to you outside of probate.

2% is pretty good for a risk-free liquid investment right now. One
needs to be careful to respect for m-i-l's needs for cash before
committing the money to anything riskier.

The house will be simple, if you don't panic. With it in her name at passing
it will come to your family on a stepped up basis. In other words the
capital gains tax goes to the grave with her.

Though don't start counting the money just yet. The national average is that
1 in 5 people will need some sort of long term care. That costs about $75k
per year.

Working with a financial planner, you can find an income portfolio that
would yield 5-6%

"Glenn Sweet" <glenns00[at]pacbell.net> wrote in message
news:VwFkb.1565$sC4.361[at]newssvr25.news.prodigy.com...
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I need help!! My father in-law just past away ( 86 years old ) and my
mother in-law is a vital and active 79 year old. My wife and I just sat down
to go over her finances as she was always a 1950's wife and never concerned
herself with the money matters. Well... to make a long story short... she
has about 185,000.00 in simple savings, and a house worth approximatly
450,000.00. ... all of which will be handed down to us. We are VERY
concerned about the tax issues that are raised by getting this sum all at
once at her passing. Is there a method of transfer that is tax friendly? We
are thinking that it should be transfered in parcels before her passing...
is this wise? should we leave the house in her name... or transfer that as
well ( California )? At the VERY least I believe we need to move the funds
to something that garners more interest than her simple passbook account (
2%.. ). Any help would be greatly appreciated!!