Share this story
Close X
Switch to Desktop Site

Keeping Inheritance In Family

Q. I've inherited a small sum of money that I would like to share with two relatives. What are the tax implications? Should I give them the full amount or in $10,000 increments over the next few years, since the IRS allows gifts, tax free, to any person of up to $10,000 annually?

- A.V.,

About these ads

New York

A. You have several options, says fee-only planner and attorney Gary Schatsky, in New York.

1. Give as much as $10,000 a year without any tax implication.

2. Give an amount over $10,000 now. But if you do, you must fill out a federal estate and gift tax form and file it with your next year's taxes.

Also, any amount above the $10,000 limit would be deducted from your federal unified tax credit, which is the total amount in your lifetime you can give to a non-spouse without federal estate tax.

The unified credit, currently $625,000, rises to $650,000 next year.

Q. Why should anyone buy a load fund when there are excellent no-load funds that are far less costly?

About these ads

- Name withheld,


A. There are far more load funds than no-load funds. Some load funds may be attractive because they have low initial investment amounts. Many international funds also carry loads.

"Money is better managed in a load fund," says a spokesman for the Franklin Templeton Group, a load group. "Managers know they must have a hands-on policy to keep performance high."

Theoretically, when buying a load fund (that is, a fund with a special charge) "you are paying the sales person for giving you advice," says Lawrence Solomon, an analyst for the No-Load Fund Investor, Irvington-On-Hudson, N.Y.

But the risk is that the "adviser" may be secretly earning a commission for touting certain funds. So, "it's better to pay [an independent] adviser's fee, and then go out and buy a fund that makes the best sense for your needs," Mr. Solomon says.

While both load and no-load categories have many top-performing funds, studies show that no-loads have significantly lower expenses - more money in your pocket.

If you want to buy a load fund, check with your 401(k) retirement account. Loads are often waived as part of your group plan.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.