Are there checks that don't have a time limit on them ?

If Gig and Sandy sell their
$340, 000.00 house can they request it be paid
with ten checks .

And cash them over the next
7 years , when they actually require th
Funds.

This message has been edited. Last edited by: bendable,

I think commercial checks have a 90 day limit on them, though thats probably from the institution issuing them to make record keeping easier to keep up.(hard to balance the books when you have an outstanding debit floating around not accounted for). Anecdotally, I have been using the last of a set of personal checks from 27 years ago and they all deposit the sameway. They are dated with the current date i put on them. I'm not sure what would happen if you had a check dated from 7 years ago. My suspicion is that it would clear just fine. I would be concerned with the bank account lasting over 7 years. The owner could die, cancel the account, run out money, get stolen, get scammed etc. 7 years is a long time to wait on someone else's money.

I'm curious why this would seem like a good idea?

UCC rule. Check is stale after six months. Bank may reject it.

Even if that were possible, what would be the point?

They could just deposit the funds in whole, and withdraw what they need piecemeal over the next seven years, plus benefit from the interest/investment gains from the funds in the meantime too.

Trying to avoid capital gains taxes?

doesn't do that.

quote:

Originally posted by WaterburyBob:
Trying to avoid capital gains taxes?

It wouldn't affect that.

The transaction would be reported by the title company to the IRS for the tax year in which the sale was finalized, not when the checks were cashed.

So regardless of whether they were paid by one wire transfer, 10 paper checks that they planned to wait 7 years before attempting to cash, a pile of gold bullion they were going to bury in their backyard, or a briefcase full of small unmarked bills that they planned to stuff in their mattress, the sellers would still have received the funds at closing and would still owe capital gains taxes on the transaction amount in total (minus any exclusions like primary residence, etc.)

I am not an accountant or lawyer but I think you would have to report the capital gain or loss on your tax return as of the date of sale. And pay the tax.

If you cash the checks or not your have received the funds. If a bank is involved they will report the transaction anyway.

When I was dealing with my elderly aunt and uncle, they had a pile of uncashed dividend checks. Some were months or years old.
The bank rejected them and they had to be reissued by the brokerage house.

Not sure what's your exact circumstances to prompt this but this sounds like a recipe for potential headaches that's more trouble than it's worth, and frankly I can't think of any situation that would make doing something like this make sense.

No. And doing so would be foolish.

1. The value represented on the check is not earning any interest or otherwise being useful. It is less useful than cash, as it is not readily available for use, or for conversion into another form of value, such as gold or silver, so it is simply a worse way of getting run over by inflation than stashing cash in your mattress.

2. The value represented on the check is merely a promise to pay, it is not actual money. What is to prevent the person who wrote the check from emptying the account and closing it? In the short term, it's personal honor, and the desire not to commit a felony by passing a bad check. It is wholly unreasonable to expect someone to keep the check balance in an account for 7 years, and the laws associated with a bad check would expire by statute of limitations prior to the expiration of the time period you indicate.

3. There is significant risk of loss. After all, it's just a piece of paper, and not well suited to getting wet, it won't survive a fire, paper can be eaten by insects, Aunt Sophie might use one or two to blow her nose while staying for Thanksgiving, I mean, you never know what could go wrong.

4. Checks are not easily negotiable during the Zombie Apocalypse. Ammo, food, precious metals, fidget spinners and small children with pretty blue eyes, can all be exchanged with other survivors for needed supplies. Checks, not so much. I mean, who wants a limp, stained, well folded, fifth hand check, with no room for additional endorsements on the back? No one, that's who. Completely worthless in such a situation.

5. Cats. Cats hate paper checks, and are tasked by their creator to eliminate them from the planet. Never piss off the cats.

So you see, don't do it. Bad. Idea. It's like dividing by zero when doing accounting and taxes. Not only does the universe implode, but the tormented sky will rain shrieking Karens wanting to see the manager, and no one wants that.

So instead, perhaps putting the total amount in a trust
That they both have access to.

But not accessable to law suits, and such.

quote:

Originally posted by bendable:
So instead, perhaps putting the total amount in a trust
That they both have access to.

But not accessable to law suits, and such.

So close to impossible it's impossible.

Not a tax professional, but I've bought and sold houses over the years.

RE: checks. They are not good forever, as mentioned above.

RE: gain on sale of house

1) the sale price is not the same as taxable gain.

They bought the house for some amount, back in the day, and probably put another chunk of change into improvements while they owned it. There are also costs of the sales process (commissions, fees, etc.) Those get subtracted out when calculating the gain

2) If it was their primary residence, and they are married, since the gain would be under $500K, the sale proceeds could be entirely Federal tax-free anyway.

IRS: Sale of your home, $250/500K home sale tax exclusion

3) gain over time - possibly an 'installment sale' transaction could be set up to recognize the gain over time.

In that method the seller finances the sale and the buyers pay off the loan over time and the seller recognizes the gain and the interest as received. Complex to set up and has its own set of risks. IRS Publication 523 "Selling your home"

And what happens if the bank the checks are drawn on fails? From the FDIC website:

What happens to checks and automatic payments that have not cleared an account before my bank is closed?

When the failed bank's deposits are assumed by an open bank, some or all of the offices typically reopen the next business day and there is usually no interruption in the processing of checks drawn on the failed bank. An exception to this procedure may include checks that were drawn against a deposit account that has been determined to be uninsured or an account that the deposit insurance determination is pending.

In a payoff, however, any outstanding transactions or checks presented after the bank has closed cannot be paid or charged against the account. The FDIC needs to freeze all deposit accounts at the time the bank is closed to quickly pay the depositors for the insured deposit balances in their accounts. Any outstanding checks or payment requests presented after the bank failure will be returned unpaid and will be marked to indicate that the bank is closed. This does not reflect on your credit standing. However, it is your responsibility to make other funds available to creditors who receive checks that were returned and did not clear your deposit account because of the bank closing.

Gig and Sandy purchased a single story, "last house"
Five years ago and spent two years upgrading the kit and bath's.
Then had a two car garage added on and a giant tree taken out.

It's in the big city , in a nice quiet neighborhood,
No easements or strip malls, no stairs to climb. A.d.a. compliant.


They are moving in to it soon and selling
This 60 y.o. old house .


They are very concerned about their aging
And a crap load of money just sitting in three hackable
Bank accounts.

Please explain "hackable bank accounts".

Thanks.

Isn't this what annuities are designed to do? Your debtor should be able to buy an annuity that makes payments to you periodically.

Of course there is still risk, for example the issuing insurance carrier could fail, or if the annuity is to be funded over time, the funding could stop.

According to them,
A friend of theirs lost $40,900.00
When someone " hacked " the account.

It sounds as though the victim
Gave someone too much personal information.

And another relative
Lost $16,000.00 when a debit card got stolen and used.

I guess they are afraid of it happening to them.

They are not sure that banks are safe.

Part of it is scary news stories.

Regarding the "hacked" account.

It most likely was not "hacked", but as you stated, they divulged information to someone that took advantage of that and the money was stolen.

Very little to stop that if the "weak link" is the individual failing to protect their assets.

The "lost/stolen" debit card without employing the available safeguards, such as not keeping a large amount in the account the debit card draws from, using card locks (most have a phone app that takes about 10 seconds to lock/unlock a card, but you have to have phone service, so you might find yourself in a store or location where you don't have phone service, but that is more an inconvenience on occasion than the benefit of being able to lock the card.

So, there are very little other options to have funds "safe", and still accessible.

Other than a safe deposit pox, most all other "financial instruments" (bank accounts, CDs, Stocks, Bonds etc) are almost all accessed online now, so if your machine is compromised or the individual falls for any "scam", losses are about the same for any of them.

Those two incidents are not a "bank" problem.

quote:

Originally posted by bendable:
According to them,
A friend of theirs lost $40,900.00
When someone " hacked " the account.

It sounds as though the victim
Gave someone too much personal information.

And another relative
Lost $16,000.00 when a debit card got stolen and used.

I guess they are afraid of it happening to them.

They are not sure that banks are safe.

Part of it is scary news stories.

Then they should engage someone they trust (perhaps a child or a professional financial advisor or fiduciary service) to help them keep their money safe.

Yes, theft occurs but it is going to be because the person somehow gave away a password or other critical information. Your friends need to get educated on how to spot scams, and how to keep their information safeguarded. They are looking at harebrained ideas that would have far more risk than what they are fearing.

It isn't the bank getting hacked, it is the person getting tricked. I have a lot of sympathy for older people dealing with modern technology, as it is confusing and constantly changing. My 94 yr old mother struggles, as does my mother in law (one of her kids manages her finances). Heck, I get frustrated with all the rigamarole, too.

Are your friends competent to manage their finances? If not, the kind thing to do is to have someone else take charge, though understandably it can be a difficult conversation. BTDT.