Lump sum of child support??

[oppsworld]

Ok bononos, maybe i'll have some left to share . We intend to put it a high yield intrest account, and just live off the interest. The amount is huge and we will never be able to ever spend it all. With that said I don't want her to see that we bought a new car, house, vacations, ect and take us back to court and say "they have more than enough to pay me more and I want more!!" I don't feel like we should have to "be careful" on what we spend so she doesn't get wind that we have some extra. So if it's in a high yield account and we just draw off the interest, can the courts use that as his income?? Nope not the powerball I suck at things like that, just alot of hard work and a few years of getting the door slammed in our face . What do I need to do to get the ball rolling for the Nevada Corporation?? Thanks!

 

[dallas702]

I can't emphasize this strongly enough. Even very large amounts of money can be frittered away more quickly than people think. If you are talking about an inheritance there will be massive fed taxes. If it is "lucky" money, there still will be big tax implications. The court will certainly consider your personal household income into a modification of the CS order. Unless UT has statutory limitations you could end up supporting both mom and child in a way they never lived before....even with those limitations in place.

The money needs to be separated legally from your household estate. If something happens to one or both of you, the NVC will continue on and there will be no federal or state intervention (read "money-sucking") from your estate. Trusts help, but they don't stop the death tax, and it won't stop major medical expenses from being collected from you personally (or yoour children).

As I said, you have a chance to change the future for you and your family. But, you have to handle your finances properly or it won't last...no matter how much you get. Offer to put the child in a better school, or whatever you can do to improve the CHILD's life. It is not your burden to support the mom, but you can always make gifts to help out IF she uses it wisely.

BTW: if UT is a community property state, whatever assets you gain in your marriage (except inherited) will be considered jointly held. Putting $$$$ into an account under "your name" won't make it your "separate property". Any good attorney will bust through that quickly. Get it into a separate LEGAL entity, and put yourselves in control of the income.

ASAP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[oppsworld]

Sounds like you know what you are talking about. So if the money.... lets say is deposited directly into a "savings account", would we only have to pay taxes on what we get in the form of interest? The thing that bothers us the most is even when we didn't have any money, she was getting everything and not having to work. Don't get me wrong if you don't have too then don't, but when you have kids that go to school all day and still refuse to work because you know that we are going to make sure the kids get what they need, not fair. We have been drug back to court so many times I can't keep track. All over money. I don't want her to get one red cent of our money we earned it not her. Each one of the kids will have a college fund, and we planned on buying each a house and renting them out until they need them. Believe me I am scared to spend anything!! Why should we have to take on all the burden, she can work she just wont. It is her choice to work or not, but I don't think she should get our money to make her life better (the child support we send never goes to the kids thats why we buy everything but food for them, she gets food stamps). Maybe it isn't even worth getting the money. Thanks a million for the advice.

 

[dallas702]

Well, just keep looking at it as a blessing, and an opportunity for the future. Depending on the source of the money you may or may not have to pay income or capital gains taxes on it this year. If it is lump sum it will be substantial, but even payments have tax implications. After it is invested you will pay federal income tax on your "profits". In savings accounts, which are extremely low yield, the interest is taxable and will be added to other present income. You can offset some of that with a big mortgage payment if you want to buy a nice house (great future investment), and at approx. 5% it is cheap money.

But, if you use another legal entity such as the NV corp, you can deduct numerous expenses that you may be paying anyway (car, second home, fuel, bookeeping, legal, domestic help, etc.). Everything expensed through the "Oppsworld Corporation" will reduce your federal and state taxes. Your assets will be protected, and you can draw salaries as officers of the corp. The salaries will reduce the fed taxes, but you pay your personal taxes based on those salaries. There are several commercial services that will set NV corps up for you, but it is really quite simple and the fees are less than $200 to do it yourself. You will need a NV resident "agent" for filing purposes, but that person should have no ability to touch the resources. If my own mother had done this instead of relying entirely on trust accounts we would have avoided over $1MM in fed taxes when she passed away.

Always remember that gaining wealth is just one part of the picture. Holding onto it is the other. If you want to email me I'll give you the name of one of the best financial men in the country. He splits his time between NV and UT, is a registered IRS "agent"(?), and has the most ethical fin.serv. business I've ever seen (for well over 20+ years).

 

[LdiJ]

I am going to clarify a few things here.

Estate taxes are paid by the estate, before the inheritance is distributed. If assets are inherited that they choose to sell, their "basis" is the value of the assets at the time of inheritance. Therefore, under normal circumstances they aren't personally looking at any huge taxes on an inheritance. However Estate taxes could cause the inheritance to be less than expected.

The interest income derived from investments is income for both tax purposes and child support purposes. Therefore if this money provides substantial interest income each year, then yes, its going to impact child support and there is nothing that can be done about that.

The only way it might not impact child support, is if the money belongs soley (from the get go) to the spouse rather than to the parent. Putting it in an account in the spouse's name does not help that if the money belongs to the parent either jointly or soley.

 

[dallas702]

Ldij;

Right, although there is a 6 month period that can be used if investments such as stocks are declining in value. Then, the estate will be recalculated at the end of the 6 months.

Oppsworld, would you mind sharing with us the source of the $$$ so we can give you a better idea of what to expect?

BTW: those federal estate taxes are due no matter what you sell or keep. They begin at approx. 40% with an exclusion amount that will help a little, but the tax is based on the entire estate first. It is one of the most egregious forms of government theft ever devised, and has no bearing on how long or hard the deceased worked to build the estate. As an aside to those who think it is so important for the gov't to get their hands on this largess, approx. 70+% of estate taxes are spent on the salaries/benefits of those who collect and re-distribute it. THAT is precicely why I recommend building assets under a NV corporation to ELIMINATE any estate tax (and probate costs) if a death occurs. NV corps are far superior to other states. JMHO.

 

[LdiJ]

Ldij;

Right, although there is a 6 month period that can be used if investments such as stocks are declining in value. Then, the estate will be recalculated at the end of the 6 months.

Oppsworld, would you mind sharing with us the source of the $$$ so we can give you a better idea of what to expect?

BTW: those federal estate taxes are due no matter what you sell or keep. They begin at approx. 40% with an exclusion amount that will help a little, but the tax is based on the entire estate first. It is one of the most egregious forms of government theft ever devised, and has no bearing on how long or hard the deceased worked to build the estate. As an aside to those who think it is so important for the gov't to get their hands on this largess, approx. 70+% of estate taxes are spent on the salaries/benefits of those who collect and re-distribute it. THAT is precicely why I recommend building assets under a NV corporation to ELIMINATE any estate tax (and probate costs) if a death occurs. NV corps are far superior to other states. JMHO.

Yes, the executor can elect to establish the basis six months later. However, again, that normally effects estate taxes rather than the taxes of the heirs....however there can be exceptions. Again though, its unlikely to cause any huge tax burden.

I also agree that estate taxes are an egregious form of government "theft".
Its particularly egregious when the estate consists primarily of a business, which provides jobs and salaries for the heirs. Nine times out of 10, unless the person leaving the inheritance is able to also leave a hefty life insurance policy, the taxes cause the business to have to be sold...and often for far less than what the business could provide on a long term basis.

I agree...I would like to know the source of the money as well. It would be much easier to give good advice.

 

[oppsworld]

Sold something...... does that help?

 

[dallas702]

Lump sum, outright change of ownership? Royalty rights? Profit sharing?

It will matter how you set up your nest egg.

I really love it when people find a niche and succeed. it's what America is really about. But.....are you already collecting, signed a contract, or speculating on a promise of a deal? Have you already written off your expenses encountered while creating this "sale"? Are you protecting your liabilities as well as your assets? I hope your legal ducks are all lined up and wearing their bullet proof vests.

BTW: as to your original question, I don't think the court would allow mom to take a lump sum because she obviously does not have the greatest money management skills. To protect the child's welfare, I can only see the court leaving a monthly stipend in effect. Besides, that keeps dad involved in his other "investment".

 

[LdiJ]

Sold something...... does that help?

Everything that Dallas said...plus more. I am an accountant. Clearly Dallas has some experience in this arena as well. You could probably get some good advice if you would just "spill your guts"....and I can't see how that would hurt you here...you are anonymous.

However, if you don't want to spill your guts here...then its in your best interest to consult not only a family law attorney, but probably a tax attorney who is also an accountant.

....and if there is ANY chance that mom could have had some claim against the particular asset being sold (perhaps unknown/undisclosed in the divorce) then consulting a family law attorney is CRITICAL.

 

[dallas702]

LdiJ brings up a very important point. Remember that movie with Nicolas Cage playing a NYC cop, and he's married to the young latino girl? He buys a lottery ticket, wins big, and tries to do the right thing by her but she keeps coming back for more because it is a "marital asset". She divorces him, spends the money like it was water. Fortunately...because it is only a movie, good old Nick ends up marrying someone much better and things work out. But, that's a movie and things don't always work out for the best if there's greed involved.

If there's the slightest scintilla of a hint of a prayer of a remote chance that the ex can make a claim against your newfound fortune because it was somehow connected or thought of during the marriage...you could spend years in court and gazillions of dollars in lawyers fees. Hopefully not!

As far as getting a lawyer to help you manage your money, I haven't seen one yet who knows squat about making money grow (except they figure out quickly that charging clients $400 an hour gives them lots of money to spend). Whether it be lawyers or financial advisors, shop around, get references, check their backgrounds, and ALWAYS verify anything you are told.

 

[rmet4nzkx]

Sold something...... does that help?

Why do secretive about what you sold, is it illegal?

 

[nextwife]

Why do secretive about what you sold, is it illegal?

Maybe it would identify them. How about this, they sold a piece of Fine Art that was behind another picture they bought at a yard sale?

I STRONGLY recommend also consulting with a good reputable financial advisor. You should be invested in a VARIETY of financial interests, and locking in some investments long term may allow you a "floor" on the return of some of that. If it is a GREAT deal of money, also consider real estate for a portion of the funds. The appreciation may be slower than stocks, but "they don't make land anymore" and a nice 8 or 16 unit, or so, apartment building can can be a good future nest egg, with investing only a fraction of the value to purchase it.

 

[dallas702]

I keep hoping to find that "art behind the art", but all I ever get is Dogs Playing Poker.

It is true that there are lots of good investments out there (especially when you have a large sum to play with), but "savings accounts" is NOT one of them. No bank will ever make money for you. Their job is to use your money to lend to others so THEY make money. The trick, as I said before, is not just to make the money....but to also keep it. Tax implications are always paramount. In fact, taxes are second only to (poor) risk in reducing wealth.

 

[Gracie3787]

she isn't working, living with her parents, and on welfare.

While I agree that SOME of the money should be protected, as a taxpayer, it disturbs me that the CP will still be able to collect welfare, even though the NCP has ALOT of money.

At some point, the CP, AND the state will find out about the money, and since she is on welfare, could come after the NCP for reimbursement.

I don't know if "selling something" for a LARGE profit is considered to be income or not. But in all fairness, and considering the fact the the taxpayers are helping to support the kids, it seems like an increase in CS would be justified. At least enough of an increase to keep the kids off of welfare.

I realize that the CP isn't working, which is unfair, because kids should be supported by BOTH parents. Maybe you can consult with an attorney to see if putting some money into some kind of trust-FOR THE KIDS- , or modify the CS so that the NCP pays the increase in a certain way- maybe a monthly amount into savings, or buys x dollars of clothes or medical. I know that may not be possible, and I may be just indulging in wishful thinking, but it seems like there should be some kind of fair solution to the problem of us taxpayers supporting kids when 1 of the parents are wealthy.
just some thoughts.
Gracie