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Shane-CPA
Shane-CPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 265
Experience:  Shane Northrop is a Certified Public Accountant, Personal Financial Specialist and a Chartered Global Management Accountant
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My aunt is coming into a large sum of money, and she is not

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My aunt is coming into a large sum of money, and she is not good with a computer. Thus, she has asked me to see if I can help her know what to do with it. How to keep it from being extremely taxed; how to know what to invest in, so that it will continue to grow; where is the safest place to 'store' it . . .
Submitted: 12 months ago.
Category: Finance
Expert:  Shane-CPA replied 12 months ago.

Shane-CPA :

Hello...my name is XXXXX XXXXX I am a Certified Public Accountant. I look forward to assisting you with your question.

Shane-CPA :

I would recommend placing it in a money-market savings account with a national bank until you meet with some professional and reputable advisors who can help lead you to some more secure and conservative investments.

Customer:

what about setting up a trust account for lessening tax purposes?

Shane-CPA :

Is she receiving the money through an inheritance?

Customer:

An investment.

Shane-CPA :

Trust tax rates are extremely high so I wouldn't recommend placing it as a disbursement to a Trust. Depending on the amount of the investment, she may be able to minimize the taxes with a distribution to her personally by opening up a retirement account if she is still working and earning money.

Customer:

She is no longer working...

Shane-CPA :

okay...is she receiving cash or does she have the option to receive the investment (for example...if the investment is an annuity, does she have the option to receive the annuity without being required to liquidate "sell" it)

Customer:

She is receiving cash, but she doesn't need it all. She may take 30,000 and keep it liquid, then not knowing what to do with the rest...

Shane-CPA :

okay...If she spreads out the distribution over 2 years (or more)...it will help her to stay in a lower tax bracket for income purposes...which will help to minimize any taxes due on the distributions...that would be the best option to keep her income as low as possible, rather than taking a distribution for the full amount which could push her into a high tax bracket

Customer:

Do you mean the distribution spread INCLUDING the $30000 or not?

Shane-CPA :

Correct...so if she takes $30,000 in the current year...she may want to delay additional distributions until next year...(for example...if she is receiving $90,000 total...she could distribute $30,000 each year for 3 years) to keep herself in a lower tax bracket...

Customer:

Ok. Thank you.

Shane-CPA :

At roughly $36,000 the income tax bracket jumps from 15% to 25% so she will want to try to remain under that amount to minimize the tax effect...

Shane-CPA :

You're very welcome! Thank you for allowing me to assist you. If I can provide you with any additional assistance in the future, please let me know. Thank you for using Just Answer and I hope you have a great day!

Customer:

Seriously? Anyone that makes over $36,000 is in the 25% bracket? That is still poverty wages! How does the tax percentages increase from there? I mean what are the different levels?

Shane-CPA :

Well first let me clarify her filing status....is she single or married filing joint?

Customer:

Single

Shane-CPA :

okay...for 2013...filing single...the tax rate schedule is as follows...$8,925 to $36,250 is 15% tax rate....$36,250 to $87,850 is 25% tax rate...and then it phases in above that to a 28%, 33%, 35% and finally a top rate of 39.6% over $400,000

Shane-CPA :

it's a big jump in taxes at the $36,250 mark

Customer:

Yes, I can see that. I had no idea. You have been helpful. Thank you.

Shane-CPA :

You're very welcome! Thank you!

Shane-CPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 265
Experience: Shane Northrop is a Certified Public Accountant, Personal Financial Specialist and a Chartered Global Management Accountant
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