6 Free Financial Modeling Lessons...and More.

Enter your e-mail below to get our new Free Modeling Tutorials ($200+ Value).

< previous | next >

Estate Tax
 

Abdel's picture
O
(Neanderthal, 2,064
 
Points)
 on 8/14/12 at 6:23pm
estate tax.jpg

Is it as bad as Peter is portaying? If not, can someone give me the factual data?

Tags:
TNA's picture

Estate taxes screw people all

O
(Human, 13,531
 
Points)
 on 8/14/12 at 6:45pm

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.

MSF Website
MACC Website
MSF Twitter

Febreeze's picture

Steinbrenner knew just went

(King Kong, 1,151
 
Points)
 on 8/14/12 at 6:59pm

Steinbrenner knew just went to die...

RIP WSO Chat.

Abdel's picture

This is insane. So when Peter

O
(Neanderthal, 2,064
 
Points)
 on 8/14/12 at 7:33pm

This is insane.

So when Peter says that he'll keep 13 cents out of every dollar, the number is correct.

ladubs111's picture

isn't there loopholes for

IA
 
Points)
 on 8/14/12 at 7:37pm

isn't there loopholes for estate tax besides life insurance such as trust funds and stuff. Where are them lawyers when u need them.

Cookies With Milken's picture

Seems like political

O
(Gorilla, 544
 
Points)
 on 8/14/12 at 9:54pm

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.

trazer985's picture

It is and it isn't. His facts

ST
(King Kong, 1,746
 
Points)
 on 8/15/12 at 5:47am

It is and it isn't. His facts are true, the realities are not. These laws are there to please the masses. It is possible to arrange your affairs into trust and what not, to protect wealth. While I will inherit no money when my parents die, I suddenly become able to borrow money from a trust that has significant assets at no interest.

I think Mr Schiff has bigger fish to fry, however i support his cause in this. Taxation of monies and assets that have been purchased with taxed income is absurd.

6 Free Financial Modeling Lessons...Straight to Your Inbox.

Confirm your name and e-mail below to get our best tips

Monkey Stats
Account information
We respect your Name and E-mail privacy. By joining you accept our terms of service.