Posted on 04/02/2009 6:07:16 AM PDT by bestintxas
For those dying to take advantage of next year's zero percent federal "death tax," they may want to kill those plans.
President Obama's budget keeps the estate tax at its 2009 level, which means the government gets 45 percent of a dead person's estate valued over $3.5 million dollars or $7 million for a couple.
Republicans argue this tax doesn't just strike the wealthy.
"It destroys a lot of small businesses and a lot of family farms and ranches in America," said Sen. John Ensign, R-Nev.
"People who aren't wealthy, who may have built up value in land over generations and many family farms find themselves in situations where they've got to sell the farm in order the pay the taxes," said House Minority Leader John Boehner, R-Ohio.
In 2001 and 2003, Republicans helped push through President Bush's tax cuts that lowered the estate tax from 55 percent to 45 percent this year and would have eliminated them next year.
Democrats contend that keeping the tax rate at 45 percent in 2010 is still a break from the 55 percent and insist the federal coffers would take too much of a hit if Congress completely repealed the tax.
(Excerpt) Read more at foxnews.com ...
Note the quote above assumes that the money is not the individuals but belongs to the government. We are becoming a nation where everything belongs to govt not to us.
I saw that story last night on Fox. There was a clip about Obama passing the largest middle class tax cut in history. I had my back to the TV, was not really paying attention and missed who said it or in what context. As I started paying attention again Fox was listing the added taxes including the death tax. Then went into the death tax story and debate.
Let’s be fair. I am not an Obama supporter but the Estate tax exemption amount was to be eliminated in 2010 only to return to an lower exemption amount ($1,000,000) in 2011. Obama’s bill keeps it at $3,500,000 now and into the future.
This is how we’ve avoiding it. Dad and I own everything jointly. We have shared savings and checking accounts. I have POA for him and am his executor.
I already OWN everything I’m eventually going to get, so no inheritance taxes. Of course, there will be other taxes down the road when I liquidate some assets, but I can plan ahead for that.
I suggest anyone that has any amount of money from $10 on up do this with one of their adult children. Of course, it has to be someone you trust that won’t raid the accounts while you’re still breathing, LOL!
This cost us nothing but a trip to the bank to set up accounts and a few papers signed so I am already on his pension paperwork, etc. (He retired from a large insurance agency many years ago; NOT AIG, LOL!) If Dad marries again, he’s leaving things as is. A new wife is on her own and must have her own money house in order to bring to the marriage or he’s not playing.
Husband and I have our own wills set up so our Son can’t inherit anything (it stays in a trust) until he’s 25. We can bump that up to a later age if he doesn’t have his act together by then. ;)
And when he’s older, we’ll do the same for him; sharing assets while we’re still kickin’; if he turns out to be an honorable young man. If not, it can stay in a trust.
Someone just dying to rip our ‘preemptive’ actions to shreds will be along in...3...2...1... *SMIRK*
If my memory serves me correctly, it was the Democrats in Congress who forced the death tax not to become history and wanted a time limit on it with the 2011 return.
Obama and his lib friends in Congress remain the party that refuses to let a tax wither and die that actually causes you to pay taxes twice and destroys many family businesses and farms.
The take by the Dems that to do otherwise is to “disenfranchise the treasury” is really a grim and frightening way to look at it.
There should not be a death tax to begin with. This money has already been taxed as this money represents an Estate’s net income/worth after taxes. Because it now is given to someone else it should be taxed again?
The response to this is, don't die with all your assets in your name. But then there's gift tax, and inheritance taxes. Another solution is the family trust solution, which needs a team of lawyers to set up to appease all the members of family, and keeo the IRS at bay.
Then there is the Ltd co. Where "the biz" is an entity of it's own, and family members become company chairs each with equal non- public shares.
Socialism, taxation eventually kills incentive for private economic growth. And now with Obama governmentalizing the large publicly traded Corporations in America, soon there will be no economic growth at all.
If you don’t get audited, you can get away with anything, but assets held in joint name with the right of survivorship are presumed to have been contributed entirely by the first to die and are included in his gross estate for federal tax purposes.
The problem with putting an amount on an Estate is it depends who does the appraisals.
Living in farm country, the US Treasury has sent out some high falutin’ associate that appraised a property at $20K an acre because it was close to a development and could potentially become lots.
Small business owners will just have to come up with the $10K to arrange their affairs in such a way to exempt their ‘estate’. The ones that get ‘caught’ usually die unexpectedly before they get to the attorney’s office.
One solution is a trust in your beneficiary(s) name, where you sign everything over to your beneficiary(s) but retain control while you are alive, and can kick them off the trust simply by buying it back for a dollar.
Takes a good lawyer to set it up though, and the more children you have the harder it gets.
Harder it gets to keep your property/land assets intact that s.
In Clinton’s rein.. death was taxed at anything over $500,000. not 1 million!
Yes, let's be fair.
This money was taxed as it was earned. Why then just because you die does 45% belong to the Government? They had their cut already.
Its an unfair tax levied on people who have no vote (except in Chicago).
If the trust settlor retains lifetime control without a dicernable standard for distribution to the beneficiary, or if the trust is otherwise revocable (and the right to buy it back for less than FMV is treated as a right of revocation) the trust corpus remains a part of his estate.
In reality there are many things to consider, such as appreciation on property, shares, 401k's etc. Most people keep their assets in tax shelters of one kind or another. Land is sort of that "mattress" but even that mattress appreciates in value from when it was first bought.
Even those 1000 1938 silver dollars dear ol'dad had sitting in his safe has increased far beyond it's cash value.
The government just swoops in and takes 45% of everything, rather than itemizing each asset and figuring out what tax rate each asset should be taxed
I don’t know about that. It’s more a contract agreed upon by the benefactor, sort of like- ok I will sell you the house but you can’t have it until we die; and we have the right to buy it back should we have a change of heart. Sign here_____ It’s also known as a “living will”.
Still liable for gift tax possibly, but only on the value at the time the will was made. There is a sale involved, so The IRS would have to contest it. I haven’t known anyone else who has done this to be chased down by the IRS afterwards, Maybe because the title is transferred at the time of this contract, and isn’t caught.
It isn’t designed to evade taxes as much as it is to avoid fights over the estate one you do die by other familly members.
1) A "living will" has nothing to do with management or transfer of assets. Rather, it's a document by which a person directs his caregiver not to artificially prolong the dying process in the event he suffers an injury or illness which is otherwise fatal in the short term.
2) A "living trust" is a marketing term often given to a revocable intervivos trust. Because the trust is revocable, transfers to it are largely ignored by the IRS and assets held by it are included in the settlor's gross estate. In an estate planning context, virtually all living trusts are snake oil. Maybe they do you no harm, but neither do they do you any particular good. Again, not getting audited does not make a tax avoidance plan legal any more than not getting caught robbing a bank makes that activity legal.
Also putting it into a trust or joint ownership does not avoid Estate taxes. Yes you can commit fraud and not pay the tax, but only if you work for the government.
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