Advice on paying off the house

[SMikulski49]

My parents are around the retirement age, and they are thinking about paying off their mortgage. They currently have a loan for approximately 134,000 and around 25 years left. through out the years my parents have been working and being old fashioned they did not like to keep the money in banks. through out the years my parents gave me 30K in cash to hold for them and they gave around 40K in cash to my sis to hold for them, plus they have another 50K in cash.

In order to pay the mortgage off they would have to depost all that money to their bank account and electronicly (or by certified check) send the balance of the loan to the mortgage company (wells fargo) Me and my sister would also lend them the rest of the money so they have the whole amount. I was wondering if there will be any problems with banks or IRS if they were to deposit around 130K into thair bank account, would there be any problems with me and my sis just transfering 30K and 40K without bank or anyone raising any flags as to where that money came from? Just in general, any issues or concerns we should  look out for? Or what is the best way to handle a situation like this?

Any advice on how to handle this situtaion would be appreciated. Thanks in advance!

[cschick]

How exactly to go about this with the least headache I'm unsure but the short answer is that yes you are probably going to set off quite a few red flags. Banks have to report large deposits to the IRS and could possibly flag it fit law enforcement as well.

[Gunnar419]

Yes. Don't do this. You will not only set off IRS flags, but you'll set of flags with the Department of Homeland Security, the DEA (who will assume you're a pack of drug dealers), and the federal Financial Crimes Enforcement Network (FinCEN).

Any cash transaction above $10,000 is considered suspicious. And any series of transactions that looks as if it's designed to evade the $10,000 threshold is also considered suspicious. (In fact, it is a separate "crime" called "structuring.")

You and your family could end up having every dime of that money taken away from you -- with no due process at all -- and you might never get it back or might get it back only after fighting for years.

It's a good thing you asked before acting. By all means google terms like "asset forfeiture" and "suspicious activity reports" before you bring a dime of that money out into the open! And be very, very, very careful. Because you will be considered criminals -- or rather, your money will be considered to be the proceeds of criminal activity -- even if you and your parents have lived absolutely pure lives.

[SMikulski49]

Thank you for the replies. The 30K is in my bank account, 10K of that money is mine. My sister has 40K in her bank account that my parents gave her for keepiong through out the years. If we took that money and transfered it would it still look suspicious as it was sitting in our bank accounts for years? 

I know the 50K that my mom has might be risky, and I have no idea how to go about depositing that money in their bank accout? Would smaller amount few time a month work for as long as it would take to deposit it? It really sucks cz they do have the money the pay off their house but its like they dont. 

They thought about refinancing the house and maybe taking out the lown for like 50K, and the money that my sister and I have use that to pay off the remaining. Then slowly pay larger montly payments to pay off the remaining 50k? 

What are some options you guys are thinking about to best resolve this situation?

thanks for all of the help

[OilFieldEngineer]

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@SMikulski49 wrote:

Thank you for the replies. The 30K is in my bank account, 10K of that money is mine. My sister has 40K in her bank account that my parents gave her for keepiong through out the years. If we took that money and transfered it would it still look suspicious as it was sitting in our bank accounts for years? 

I know the 50K that my mom has might be risky, and I have no idea how to go about depositing that money in their bank accout? Would smaller amount few time a month work for as long as it would take to deposit it? It really sucks cz they do have the money the pay off their house but its like they dont. 

They thought about refinancing the house and maybe taking out the lown for like 50K, and the money that my sister and I have use that to pay off the remaining. Then slowly pay larger montly payments to pay off the remaining 50k? 

What are some options you guys are thinking about to best resolve this situation?

thanks for all of the help

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If you are able to prove the sourcing of the funds there is not an issue. Depositing 130k all at once will cause you ALOT of problems though. I deposited 53k after winning on blackjack in Vegas and the bank asked about the source and I simply wrote an explanation for them to have on file if they were asked. I never heard anything about it and in fact it was the truth. There is nothing illegal about the practice of keeping large sums of cash at one's home. However the laws are structured where the authorities can seize said funds until the origin can be substantiated. Also if you gift that amount of funds to your parents it can have tax ramifications. 

If your parents are older I would recommend this. You and your sister attempt to purchase your parents home for what they owe. I say this for several reasons. You both already have care and custody for a substantial portion of the money. Simly put down 60k or so when you do the loan. Then pay the remaining balance of the loan out of the 50k your parents have by depositing in small under about 3k a month but vary the amount each month. Your parents are probably going to give the home to you guys in the will so it will already be in your name and this will not count the home against the estate during the probate since the taxes for inheritance did change. 

I would run this by an attorney and tax professional prior to any action though. 

[JM-AM]

Just to make it simple, it is probably easiest to just make additional payments on your loan month to month.

Make the normal payment for lets say March 2013, wait until payment clears, and make an additional payment towards principle only for any amount up to $9999, but I wouldnt push it to the limit. I would personally stagger the additional payments, one month pay $5K, next month pay $8K, and repeat the process.

In all actuality it is highly unlikely it will become a big issue with your elderly parents, yes they would still have to explain where the money came from, but they are not the only ones who do not believe in Banks. I am sure they paid their taxes through-out the years, so they do have some paper trail, and if retired their income is still taken in consideration.

But just not to raise to many flags you can pay it off over time, if that seems the easier route for you to go.

EDITED TO ADD: While we did keep money in our checking accounts, we paid off our mortgage in a few years with multiple payments of $9500 as additional principle (sometimes 4 times a month), on top of paying normal monthly mortgage payment. We never had any issues or questions, but we did have our money in checking accounts and savings account, transferring back and forth.

[SMikulski49]

Thanks for all of your advicse everyone, thank god I asked first before I started moving money around from account to account. Thanks to all of you I just avoided getting locked up and probably my parents lol.