The estate tax and other red herrings

[GLWasteful]

@Scylla

That’s a fallacious argument. In 2000 only 2% of estates were subject to Federal estate tax. In '05 that number is 1/2%. Contrary to your statement about the “family farm,” the biggest component to Federal Estate Tax susceptability is the small business owner or partner.

I think you misread my argument, then. I was saying that the number of effected estates was small and getting miniscule. Which is what it sounds like your saying. Please enlighten me if I’m misreading your point.

The tax laws that govern the disposition of large estates are **incredibly[/b[ complex and onerous. They change frequently (in fact they change substantially every year,) vary from state to state and are often contradictory. Would you like to talk about buy-sell agreements, IRS Sec 2031: basic Includability, Dower or Curtesy Interests, revocable interests, powers of appointment, state estate taxes, the taxability of qualified assets?

Do you have an IRA or a retirment plan with significant assets? Is that in the trust, too? Really? Are you taking advantage of NUA dispersals?

When you put your assets into trust did you pay attention to IRC sec.1015: Property transferred During Lifetime by Gift? Are you the trustee? Is your trust Revocable or do you maintain control over your assets thereby making them part of your estate?

Will your trust take advantage of the unlimited spousal deduction, lifetime gifts and unified credit? Shouldn’t you have a testamentary trust on death rather than placing it all in a trust and blowing your unified credit and spousal exemption?

What about life insurance? Is that “in the trust,” too? Shouldn’t that have it’s own trust? Who’s the beneficiary or owner? Will it be taxed? When you put everything in the trust did you lose the free step up in basis upon death granted to estates?

Honestly, I don’t know. I allow someone who deals with trusts specifically designed for individuals in my position to deal with the heavy lifting.

Sadly, this is not true. More the exception. Chances are they had their ducks in a row 20 years ago and their estate changed and the laws changed and their husbands died, and now they are very old and afraid of being taken advantage of and maybe a little senile and they are not lawyers or accountants or estate planners, and are quite baffled by the whole process.

Then they weren’t very astute about it. One thing that I absolutely understand is that laws change, which is why my guy is charged with staying atop things. If someone sets something up and doesn’t revisit it, knowing that the laws change, then they’re pretty fucking stupid. Or hopelessly naive. But considering that precious few people who are that wealthy managed to fall into it with no forethought or effort, then I’m inclined to go with my first statement.

You generalize poorly. If your estate is over two million dollars you have something to fear from Federal estate taxes. You have something to fear with far less from state estate taxes in many states. You have something to fear if you have significant assets in a retirement plan even if they don’t even approach the unfied credit.

If your estate is over two million dollars, and you’re one of the 2%, that is. And that percentage is shrinking. As you’ve already pointed out. As to state taxes and the like, I don’t know. Once again, that’s why I know a guy.

Your plan may be great or it may suck. I don’t care. When you use yourself as an example that example is open for debate, especially when you make large and stupid generalizations such as, to paraphrase “It’s easy to avoid estate taxes just put it all in a trust.”

So it seems that you’re most assuredly not one of those “compassionate conservatives” that I’ve heard about, but seen damned little of. As to your paraphrase, it can be shown how wrong you are simply by looking at the post wherein I say:

@GLWasteful

Ask trusted friends and acquaintances for a good attorney, settle on said attorney and ask him to explain it. I fear that any explanation I could give would be less than adequate, and this is really something where you should sit in the same room as the individual explaining it. Then go back and ask questions afterward (because you will have questions) and just generally develop a rapport with this person. Another good source is a bank, since they have trust departments filled with people whose job is to explain this sort of thing.

If you feel comfortable with the explanation given, go with it. Of course, if your estate isn’t ginormous, then you wouldn’t have to worry about the inheritance tax anyway, but you knew that.

Please note that at no point do I say, “Point your nipples to the wind and rush right out and set up a trust.” A paraphrase of what you said, yes, but one I’m rather fond of.

In my experience (and it is extensive,) about 75% of trusts that I see are innapropriate or not doing what the person who set it up thinks its doing. Don’t get me wrong. If you need a trust, it’s the greatest thing in the world when done right.

And with the second part of this, I heartily concur. As to your experience, well, you know more about that than I do.

[Gatopescado]

Best Pit Thread Ever. I just want to add “Fuck!”

That’ll keep it here instead of it moving to GD!

And to answer the question in the OP: They keep trying to repeal the “Death Tax” because I voted for them and I tell them they need to.

And what the hell is so wrong with selling the farm for 137M? Jealous? Fuck you! Polish my wheels!

[I_Love_Me_Vol.I]

@Don't Call Me Shirley

Money is changing hands. The government siphons off its cut when money changes hands. Explain why my getting paid for work I do is a good reason for the government to siphon off money. Explain why me having a good night at the tables in Vegas is a reason for the government to siphon off money. Explain why my parents giving me a gift is a reason for the government to siphon off money.

I’m not real big on the double dipping, but in terms of taxing in general, I don’t think our tax burden is high enough. You pay taxes so that the government (which you help democratically select) can continue to function. If there were no effectively functioning government, you most likely would not be able to earn much money-- if any at all, you would have very little security, and probably not even live to see the age of 2.

Taxes are the dues you pay to belong to the richest club in the world–the USA. You are lucky to be here (if in fact, you are American). And right now, we are not paying enough tax, IMO. I say that mostly because we are trillions of dollars in debt.

[Damuri_Ajashi]

We tax all residents (citizens and greencard holders are taxed exactly the same) on their worldwide income, anyone that earns money here pays taxes on the money they earn here (there are huge exceptions for investment income).

I am not advocating (nor am I resisting) the idea of a graduated system with a top marginal rate of over 90% (two of those years were during WWII) the average real GDP/capita growth was 2.822%.

The average real GDP/capita growth during the 1981-1992 (the Reagan/Bush years) was 2.001%

The Average real GDP/capita growth during the Clinton yearas was 2.504%

The average real GDP/capita growth from 2001 to 2005 (the Bush years) was 1.170%

What does this tell me about higher income tax rates? Frankly, I don’t think it tells us much at all but it certainly doesn’t support the trickledown theory.

When we taxed 90% of your income over $400,000 in 1950 (about 2.7 million/year) it didn’t hurt our ability to recruit top CEOs or have a negative impact on economic growth (indeed these years saw relatively high growth). Sure, the high marginla rate will generally become a cap on salaries and I am not a communist but I generally reject the notion that we need to offer the opportunity to earn 100 million dollars a year to get maximum effort from our executives.

@I Love Me

I’m not real big on the double dipping, but in terms of taxing in general, I don’t think our tax burden is high enough. You pay taxes so that the government (which you help democratically select) can continue to function. If there were no effectively functioning government, you most likely would not be able to earn much money-- if any at all, you would have very little security, and probably not even live to see the age of 2.

Taxes are the dues you pay to belong to the richest club in the world–the USA. You are lucky to be here (if in fact, you are American). And right now, we are not paying enough tax, IMO. I say that mostly because we are trillions of dollars in debt.