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Aug 3, 2011
90 Year Old Lotto Winner Cant Take It With Him
There was a great story in the newspaper yesterday about a 90 year old man who won the lottery. His winnings were to the tune of 7 million NIS. He plans on using the money to buy each of his grandchildren an apartment. Interestingly, he says he has waited 40 years for it to be his turn to win, and he has not yet told his family. He played an automatic lotto card for 46.60 NIS, and saw on the television that he had won when they showed the winning numbers.
He told lottery officials that he has no need for the money. He said he and his wife are doing fine, and they cant take the money with them, so he plans on helping each of his 8 grandchildren to buy apartments.
The fellow said "Unfortunately, a very difficult reality has evolved in the country where only someone who wins the lottery can afford to buy a home and live respectably. It is important to me that all my grandchildren should be taken care of and that they should not live in tents in the street.
We are now before Tisha B'Av and only after that will I tell my family. I won't keep the money because shrouds have no pockets. I won't be taking anything with me to the next world, so I have no need for money. So I was raised, to help the children and the grandchildren, and nobody is happier than me that at the end of my life I am able to fulfil that dream."
As the article cocluded, he wont even really be able to help them buy their apartments. At least not completely. They will still be better off than most people. After taxes (25%) he will get 5.25 million NIS. Dividing that among each of his 8 grandchildren means they will each get 656,250. That is hardly enough to buy an apartment in Israel. Maybe somethign small in a development area, a 3 room apartment in a new project "on paper".
But at least they will have enough for a significant down payment.
He told lottery officials that he has no need for the money. He said he and his wife are doing fine, and they cant take the money with them, so he plans on helping each of his 8 grandchildren to buy apartments.
The fellow said "Unfortunately, a very difficult reality has evolved in the country where only someone who wins the lottery can afford to buy a home and live respectably. It is important to me that all my grandchildren should be taken care of and that they should not live in tents in the street.
We are now before Tisha B'Av and only after that will I tell my family. I won't keep the money because shrouds have no pockets. I won't be taking anything with me to the next world, so I have no need for money. So I was raised, to help the children and the grandchildren, and nobody is happier than me that at the end of my life I am able to fulfil that dream."
As the article cocluded, he wont even really be able to help them buy their apartments. At least not completely. They will still be better off than most people. After taxes (25%) he will get 5.25 million NIS. Dividing that among each of his 8 grandchildren means they will each get 656,250. That is hardly enough to buy an apartment in Israel. Maybe somethign small in a development area, a 3 room apartment in a new project "on paper".
But at least they will have enough for a significant down payment.
Labels:
housing crisis,
Jews
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ya, but maybe lets be optimistic. maybe some of his grandchildren are still very young, and he intends to put the money away. 10-15 years of interest for 650,000 shoudl be worth something.
ReplyDeletethen again if he is 90, they are probably already in their 20s... :-(
I don't know what the tax law is in Israel, but in the US you can't give more than $13,000 per year to your children or grandchildren without paying a 50% gift tax. This is because the tax authorities don't want to you to avoid the 35% - 50% inheritance tax.
ReplyDeleteI imagine the same laws or something similar applies in Israel, so he could actually only loan them the money, and they'll have to pay inheritance taxes on what they haven't paid back after he passes on.
dont know. I never heard of there being a gift tax in Israel.
ReplyDeleteAny israeli accountants, or anybody else who might know definitively, out there know the answer to this?
I'm not an Israeli accountant, but a US CPA. That being said, please check with your own tax advisor before taking any actions - particularly since my area of expertise is not estate and gift taxation.
ReplyDeleteRe: the $13,000 annual limit - amounts that exceed this amount eat into an individual's "lifetime exemption" amount. I've not looked at this in a number of years, so I'm not sure exactly how much it is, but the last time I checked (about 10 years ago), it was $600,000. It's likely gone up since then - the amount exempt from estate tax has (I believe to $3 million, though I could be wrong).
Another point - Israeli tax law is significantly different from US law, so trying to extrapolate from one to the other is a fool's errand. As it applies to this situation, I can't speak to gift tax, but I do know that there is no estate tax in Israel. Accordingly, the reason for the gift tax in the US does not apply in Israel - since a lifetime gift in Israel does not avoid any post-death taxation on the transfer of the property.