Estate Tax
Is it as bad as Peter is portaying? If not, can someone give me the factual data?
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Estate taxes screw people all the time unless they appropriately plan insurance wise. The issue is that the estate tax factors in illiquid assets.
Example
You have a family farm, summer home, whatever. Your parent(s) passes away and you are the heir. Now the taxes are based off the value of the home, farm, whatever. So you owe X amount of dollars on an asset that you either have to sell to pay the tax bill or come up with the money elsewhere. If you don't have the cash you are f*cked.
This doesn't even factor in the morbid idea of the government taking something that has been taxed throughout a person life simply because it can. I get the rational about stifling massive legacies, but I simply cannot get over the moral hurdle of taxing someones estate in this fashion.
Steinbrenner knew just went to die...
This is insane.
So when Peter says that he'll keep 13 cents out of every dollar, the number is correct.
isn't there loopholes for estate tax besides life insurance such as trust funds and stuff. Where are them lawyers when u need them.
Seems like political pandering in this video. No one as smart as Peter wouldn't download their estate over the years.
There are always grantor retained annuity trusts. Too lazy to type this out so I just copy / pasted an example of a situation where a grat would be beneficial below.
No one who was smart enough to accumulate > $5mm in assets would be dumb enough to not have a decent estate planner (tax lawyer) or accountant. I know this site likes to poke fun at PWM types but they have all the details on your assets and help you plan for retirement. They also network with accountants and both sides pass business off to each other. If you have a PWM guy you should also hire an accountant of the same caliber.
Example #1
Dad holds $1,000,000 of a stock that pays a 10% dividend. Dad establishes a GRAT with a 13 year term and transfers the $1,000,000 of stock to this GRAT. Each year the $100,000 dividend is paid to the GRAT and the GRAT then pays the required $100,000 annuity to Dad/grantor. The value of the gift may be as low as $13,710. This is a gift of the future interest and does not qualify for the annual exclusion. Dad/grantor must use part of his $1,000,000 lifetime gift exemption or pay a gift tax.
At the end of the GRAT term or 13 years, Dad would have received $1,300,000 ($100,000 per year x 13 years) in annuity payments. The remainder value in the GRAT is the stock and would still be valued at $1,000,000 assuming no appreciation. The stock would then be distributed to the remainder beneficiaries, usually Dad’s children. In this case, the children will have received an asset worth $1,000,000 but Dad only had to report a gift of $13,710.
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