Estate tax wtf

[AZGrizFan]

The vast majority of Americans couldn't care less about the estate tax.

well, if Obama has his way regarding tax rates on the "rich" , there'll be even FEWER Americans who will care about the estate tax....

[clenz]

I'm intrigued by the statement that a retroactive tax could be imposed for 2010 to tax those who died during the time there was no estate tax. How can you retroactively tax a dead person?

The government can tax anything and anyone at anytime.


I'm waiting for the government to start taxing millionaires that died 50 years ago.

[danefan]

I'm intrigued by the statement that a retroactive tax could be imposed for 2010 to tax those who died during the time there was no estate tax. How can you retroactively tax a dead person?

I'm intrigued by the statement that a retroactive tax could be imposed for 2010 to tax those who died during the time there was no estate tax. How can you retroactively tax a dead person?

The government can tax anything and anyone at anytime.


I'm waiting for the government to start taxing millionaires that died 50 years ago.

I don't think you're right on that one UNI31F.

You'd be retroactively taxing the estate, not the dead person but there is a pretty well-defined body of law on retroactive taxes that would likely prevent it from happening. The Due Process clause applies.

SCOTUS took up a similar issue in US v. Hemme where it held that Congress could not apply a gift tax retroactively where there was no gift tax when the gifts took place.

It would be an unconstitutional "taking" by the government.

[ASUG8]

Hey DF -
Can't you shelter a lot of your estate and avoid probate by setting up a trust?

[From the class of 09]

SCOTUS took up a similar issue in US v. Hemme where it held that Congress could not apply a gift tax retroactively where there was no gift tax when the gifts took place.

It would be an unconstitutional "taking" by the government.

Yeah I don't think it is a good idea but it has been talked about and you know there are some lawyers just drooling over the potential lawsuits.

[danefan]

SCOTUS took up a similar issue in US v. Hemme where it held that Congress could not apply a gift tax retroactively where there was no gift tax when the gifts took place.

It would be an unconstitutional "taking" by the government.

Yeah I don't think it is a good idea but it has been talked about and you know there are some lawyers just drooling over the potential lawsuits.

I'm wiping my chin as we speak thinking about the legal fees I could rake in taking a challenge through the federal courts.

[From the class of 09]

Hey DF -
Can't you shelter a lot of your estate and avoid probate by setting up a trust?

I ain't DF but you can avoid probate but you still (in a normal year) have to pay the taxes. Rev Living Trust is def something to consider for yourself if you're thinking of dying

[danefan]

Hey DF -
Can't you shelter a lot of your estate and avoid probate by setting up a trust?

Not totally, but it really depends on the type of trust and specifically who the beneficiaries of that trust are. Its

The government will get their money eventually on your estate unless you give it to a charity (unlimited charitable deduction). Even if you give it to your spouse the gov't will eventually get their's when your spouse dies (unless she spends it or gives it to a charity).

You can avoid probate, but don't believe the hype about probate. If you set up your will properly, probate isn't necessarily a bad thing.

The "Norman Dacey" thought process actually cost a lot of families money in long run.

[danefan]

Hey DF -
Can't you shelter a lot of your estate and avoid probate by setting up a trust?

I ain't DF but you can avoid probate but you still (in a normal year) have to pay the taxes. Rev Living Trust is def something to consider for yourself if you're thinking of dying

Yes, avoiding probate and avoiding estate (or inheritance taxes as some states have) are two mutually exclusive things.

[ASUG8]

Hey DF -
Can't you shelter a lot of your estate and avoid probate by setting up a trust?

I ain't DF but you can avoid probate but you still (in a normal year) have to pay the taxes. Rev Living Trust is def something to consider for yourself if you're thinking of dying

We set up our wills several years ago and (although I asked) the attorney we used recommended that we not set up a Revocable Living Trust at the time due to cost and the fact that we really didn't have a pile of assets accumulated. Not that we've become suddenly wealthy or anything, but we might want to revisit the issue now.

I'm not really thinking of dying, but there's better than a coin toss chance that it might happen eventually.

[From the class of 09]

I ain't DF but you can avoid probate but you still (in a normal year) have to pay the taxes. Rev Living Trust is def something to consider for yourself if you're thinking of dying

We set up our wills several years ago and (although I asked) the attorney we used recommended that we not set up a Revocable Living Trust at the time due to cost and the fact that we really didn't have a pile of assets accumulated. Not that we've become suddenly wealthy or anything, but we might want to revisit the issue now.

I'm not really thinking of dying, but there's better than a coin toss chance that it might happen eventually.

yeah everybody's situation is different talk to the professionals who know your situation.

[danefan]

I ain't DF but you can avoid probate but you still (in a normal year) have to pay the taxes. Rev Living Trust is def something to consider for yourself if you're thinking of dying

We set up our wills several years ago and (although I asked) the attorney we used recommended that we not set up a Revocable Living Trust at the time due to cost and the fact that we really didn't have a pile of assets accumulated. Not that we've become suddenly wealthy or anything, but we might want to revisit the issue now.

I'm not really thinking of dying, but there's better than a coin toss chance that it might happen eventually.

I wouldn't do anything until they pass the new estate tax.

[UCABEAR]

I just think we all need to come to the realization that we don't own anything. You can pay off your $250,000 house but don't owe a penny in property taxes or you'll lose it in a heartbeat. Buy a used car in Arkansas and you have to pay sales tax on it. (Wasn't that crap paid when it was bought new?) The list goes on and on...we just have to realize we don't own anything..especially money.

[houndawg]

I just think we all need to come to the realization that we don't own anything. You can pay off your $250,000 house but don't owe a penny in property taxes or you'll lose it in a heartbeat. Buy a used car in Arkansas and you have to pay sales tax on it. (Wasn't that crap paid when it was bought new?) The list goes on and on...we just have to realize we don't own anything..especially money.

Figured that out decades ago. The trick is to minimize the interface between you and the guvmint and the bankers.

Pay cash even if you have to pawn the spare tire.

[UCABEAR]

I just think we all need to come to the realization that we don't own anything. You can pay off your $250,000 house but don't owe a penny in property taxes or you'll lose it in a heartbeat. Buy a used car in Arkansas and you have to pay sales tax on it. (Wasn't that crap paid when it was bought new?) The list goes on and on...we just have to realize we don't own anything..especially money.

Figured that out decades ago. The trick is to minimize the interface between you and the guvmint and the bankers.

Pay cash even if you have to pawn the spare tire.

There's an awful lot of water between me and my money.

[houndawg]

The vast majority of Americans couldn't care less about the estate tax.

well, if Obama has his way regarding tax rates on the "rich" , there'll be even FEWER Americans who will care about the estate tax....

Not my problem.





Unless they look in that hollow log in the back pasture.

[kalm]

What ever happened to fiscal responsibility...no such thing as a free lunch...that shining city on the hill?

At least there's still a few who are willing to pay for America:

"My life of great comfort was made possible in spite of the estate tax, and my grandfather would be the first person to tell you he was able to amass his fortune not in spite of but because of the American system," including that tax, Abigail Disney, grandniece of Walt Disney and granddaughter of Roy Disney, said in a conference call with reporters.

For his part, Julian Robertson, on Forbes' list of the 400 richest Americans in 2009, whose firm Tiger Management was one of the first hedge funds in the 1980s, said the estate tax is a key tool for lowering the government deficit.


"You don't get out of a credit crisis by borrowing more money. You get out of a credit crisis by putting your house in order, and in America's case by bringing its budget deficit down," Robertson said on the call.


"This implies tax increases. The fairest way to increase taxes would be to tax the least deserving recipients of wealth, which are the inheritors," Robertson said.

While some claim the estate tax leads to dollars getting taxed twice -- first by income tax and then the estate tax -- that wasn't the case for her family, Disney said, in a telephone interview.


"I was 18 in 1978, which is when my inheritance kicked in," Disney said. "Between 1978 and now, 2010, go have a look at what happened to Disney stock (DIS: 34.99, 0, 0%) ."


"I was on the receiving end of a ridiculous amount of good luck, none of which I would pay taxes on except so far as I paid a capital-gains tax when I sold those assets," she said.


"Those assets were mine to borrow against, to deploy in a variety of ways. I benefitted from the appreciation of those assets," she said. "If I pass appreciated assets to my children they never get taxed unless there's an estate tax."


"My grandfather had assets that appreciated in value. He didn't make income the way other people do. Of course, he paid taxes in his lifetime [but] the assets that appreciated in value in his lifetime that he never sold and paid a capital-gains tax on, he passed those through to me and they were never taxed."

[houndawg]

What ever happened to fiscal responsibility...no such thing as a free lunch...that shining city on the hill?

At least there's still a few who are willing to pay for America:

"My life of great comfort was made possible in spite of the estate tax, and my grandfather would be the first person to tell you he was able to amass his fortune not in spite of but because of the American system," including that tax, Abigail Disney, grandniece of Walt Disney and granddaughter of Roy Disney, said in a conference call with reporters.

For his part, Julian Robertson, on Forbes' list of the 400 richest Americans in 2009, whose firm Tiger Management was one of the first hedge funds in the 1980s, said the estate tax is a key tool for lowering the government deficit.


"You don't get out of a credit crisis by borrowing more money. You get out of a credit crisis by putting your house in order, and in America's case by bringing its budget deficit down," Robertson said on the call.


"This implies tax increases. The fairest way to increase taxes would be to tax the least deserving recipients of wealth, which are the inheritors," Robertson said.

While some claim the estate tax leads to dollars getting taxed twice -- first by income tax and then the estate tax -- that wasn't the case for her family, Disney said, in a telephone interview.


"I was 18 in 1978, which is when my inheritance kicked in," Disney said. "Between 1978 and now, 2010, go have a look at what happened to Disney stock (DIS: 34.99, 0, 0%) ."


"I was on the receiving end of a ridiculous amount of good luck, none of which I would pay taxes on except so far as I paid a capital-gains tax when I sold those assets," she said.


"Those assets were mine to borrow against, to deploy in a variety of ways. I benefitted from the appreciation of those assets," she said. "If I pass appreciated assets to my children they never get taxed unless there's an estate tax."


"My grandfather had assets that appreciated in value. He didn't make income the way other people do. Of course, he paid taxes in his lifetime [but] the assets that appreciated in value in his lifetime that he never sold and paid a capital-gains tax on, he passed those through to me and they were never taxed."

Cool, an old-school rich person with class.

[LeadBolt]

I've always thought that inheritance taxes should be at the rate of long term capital gain taxes, which is what most of them are.

[danefan]

I've always thought that inheritance taxes should be at the rate of long term capital gain taxes, which is what most of them are.

I agree. A more fair system of estate tax is to tax the assets as if they were disposed of on the date of death. Then treat all the disposition the same way you would treat any other dispositon - tax only the gain, determine whether its a capital asset or not, if its capital determine whether its a long-term or short-term gain and apply the applicable rate.

You can still provide for a credit for smaller estates, but that credit would just be tailored to the gain instead of the overall value of the estate.

This also solves the problem with double taxation. You are only getting taxed on the income not previously taxed (i.e. the gain).

The problem with this in practice though is that it will make estate tax returns very complicated, especially if the decedent did not keep good recrods.

(and BTW - to avoid confusion - inheritance tax and estate (aka death) tax are two very different things. The inheritance tax is a tax imposed on the beneficiaries of an estate. Estate tax is imposed on the decedent's estate....there is no federal inheritance tax. There are some states that still have inheritance taxes (NJ for one), but most have done away with them.)

[CitadelGrad]

What ever happened to fiscal responsibility...no such thing as a free lunch...that shining city on the hill?

At least there's still a few who are willing to pay for America:

I think you mean to say that there are still a few idiots around who are willing to enable and subsidize the governments compulsive and fiscally irresponsible behavior.

You know, the wealthy inheritors cited in the article have never been prevented from paying more than they were obligated to pay. If they feel so strongly about the matter, why didn't they just write checks to the government? These are just more people who believe they are entitled to tell others what they may or may not do with their money. We already have too many of those people in Congress and the White House.

[kalm]

What ever happened to fiscal responsibility...no such thing as a free lunch...that shining city on the hill?

At least there's still a few who are willing to pay for America:

I think you mean to say that there are still a few idiots around who are willing to enable and subsidize the governments compulsive and fiscally irresponsible behavior.

You know, the wealthy inheritors cited in the article have never been prevented from paying more than they were obligated to pay. If they feel so strongly about the matter, why didn't they just write checks to the government? These are just more people who believe they are entitled to tell others what they may or may not do with their money. We already have too many of those people in Congress and the White House.

Why do you hate generous and grateful rich people?

[CitadelGrad]

Are they really that generous? It seems that they've done only what the government has compelled them to do. Perhaps their gratitude is misplaced if they feel more of it toward the government than those who actually created the wealth that they enjoy.