Giving and minimising taxes?

Mutant — Sat, 06 May 2006 09:50:50 -0800

Setting up a financial trust for Maw? My mother has tremendous problems handling money. Or, to be more specific, holding onto it.

I left the US in 1998, and every year since I've given her $10K for a Christmas gift and every year in it's all gone in two months or less. She work(ed) as a Health Care Aide, earning about $18K but recently lost her position.

Upon investigation of her affairs I found she's only got about $4K in cash, and she's not even certain about that. Her and I disagree about money, so she's probably inflating this a little.

In the past every time I tried to get her to save there was a lot of hollering (not from my direction mind you) so I just gave up and let her enjoy herself. Now's she's got a problem, but there are pluses: the house is fully paid for, she lives in my very small hometown where almost everything is within walking distance, she already receives a small Social Security cheque and I'm liquid.

I don't mind giving her a little more than the $10K I'd previously been passing her way, but would like to do this in a more controlled manner and hopefully minimise my taxes.

From Business School I know a little about trusts, and believe that I could establish a one with her as the beneficiary, but can I do this in such a manner that I can control the assets while all revenue and hence tax obligations on the income stream will accrue to her? Also, should she pass away before me I'd like to regain control of the capital. Is such a vehicle possible?

I have no problem about setting up a trust for her, and capitalising with a couple hundred thousand, and know from my own portfolio that I can easily earn a dividend stream of ten percent or more on the securities if I pick and trade them, but how do I go about this? What type of professional will help me do this as cheaply as possible?

If it matters I live in London and Maws in the United States. I'm just not sure what to ask for, roughly how much it would cost to establish & run, where it's best located, if it's possible to regain control of the assets later, or even if I"m better off just dumping this money into my own brokerage account and taking the hit on income taxes myself.

Thanks much!

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Giving and minimising taxes?