Asking for a friend and looking for advice - Joe has a net worth of approximately $4.0 million - mostly funds in brokerage account or IRA held in a trust. He is 85 years old and has a live in girl friend who is 77. Joe is paying all of the current living expenses and when he dies, he want to provide something like $30,000 per year income for the girl friend until she dies. Joe has two adult children and a will that names them as beneficiaries.
What is the best way to set this up to optimize taxes and keeping it simple? Options seem to be setting aside a certain amount of money and use the income from that to fund the $30k per year. Is that taxable or is there a way to avoid taxes? Joe is well below the $11.7 million gift tax level and could easily give girlfriend a lump sum gift now (in lieu of the annual payments) that would be tax free. Does setting up a separate trust make sense.
Lots of parameters. All suggests welcome. Thanks.
