as far as the titling issue, it is different in different states. you'll have to check your situation.

whether some people are more or less blessed with monetary assets, etc. is completely irrelevant. if a person works hard and gathers assets for his family why should the gov't get a second crack at it?
and i honestly don't know what you are calling a red herring. the estate tax is a redistribution of wealth, pure and simple. we say we don't agree with that in our country, but then we turn around and are willing to do it in this way.

BTW, the family involved is taking it all very well, but stop and look at it from their perspective. work hard, build a life, gather assets, then have to give the gov't 40% when he dies. why?

i guess part of my point is that having ridiculous taxes like this only generates more business for CPA's and attorneys. the ultra wealthy protect what they have. even most of the everyday successful people in danger of the estate tax build their trusts to avoid it. so in the end the people who do end up paying for it are the ones that aren't much different from us.

as for me? i'm not in any danger of going over those limits any time soon. but i do have an excellent trust in place and all of my life insurance is owned by a separate Life Insurance Trust so that it beats the aggregate rules.

i just think it is sad that people don't see this as a problem because the politicians have been so successful at turning the classes against eachother. i guess they have to keep us stabbing at each other so we won't turn our knives on them, huh?

They arent. The total amount of assets transferred to the spouse is deducted before tax, as long as the spouse is a US citizen. And if the total estate is $1,500,001 million, the tax is only on the last $1, 0r 45 cents. There's no sudden point where if you make $1 more, you suddenly owe $450,000. Just like poor people pay no income tax, they pay no estate tax. The bar is just at a different level, so the middle class pays no estate tax either. It only affects 2% of the poulation.

As for what the cutoff point is, that's something to be hashed out in legislation. I'd be happy with $10 million now, indexed to inflation.

Long Zen Rant Ahead.
 

Ok, you found one, I do support it.

Paris Hilton's daddy.

Small estates.

Ok, you're looking for a number, right? Why not have a sliding scale? Something like mutiples of our income tax brackets? Some Median income times 2x or 3x is the floor, and then in chunks moving upward from there?

Ok, I accept that there might be some modest people in my area that have large assets. Ok. Your point? That they're stand up people, who are involved in the community, that they care about their families, that getting things done ranks ahead of showing off? Yeah, so what? Is that exclusive somehow of wanting to pay their fair share?

I heard another thing that seems relevant here--

It's not about equal giving, it's about equal sacrifice.

Yes, sacrifice. Many people are doing it, and it's NOT equally shared, nor are the benefits of those sacrifices equally shared. That is unfair.

So you're saying that "wealthy" isn't what shows, right? I agree with that. Wealthy is more than a figure on a balance sheet. Yes, money and material possesions are part of the equation, but no amount of money, regardless of how it's spent or saved is enough to create the comfort and security of real wealth. Only a state of mind can complete the picture. A state of mind of contentment, that realizes sufficiency.

You aptly point out that the millionaire postman who drives a used Camry displays more happiness than the overextended fool with the Hummer. Would the postman be any less content if his bank balance were, 25% lower? Hard to say, but someone who functions that way isn't wrapped around the axle like the Hummer-fool. By the way, why a Hummer? Was the Chevy Suburban or Ford Excursion inadequate in some way?

Think about what the wealth represents. Security, options, choice, peace of mind. Those are all head and heart things, not figures on a balance sheet. The more loosely those goals are connected to the amount of money in the bank one has, the more likely one is to reach them both.

A question that comes to mind is whether you should be taxed on 'stuff' or money or both or what?

1) The postal millionaire (funny sounding that) has a million dollars worth of stuff dies and leaves all of his stuff to his heirs.

2) Credit laden stock broker millionaire has a million dollars in the bank and stocks dies and leaves all of his monies to his heirs.

In scenario 1, the heirs has to sell stuff to pay the estate tax and now has no home or business to live in or continue with.

In scenario 2, the heirs go on about their business.

Probably a bit oversimplified but not untrue.

NOT oversimplified.

The magic words to make this spell a reality are "Asset Protection Trust".

Until 1987 (?) it was not legal anywhere in the US to created a trust for the benefit of oneself. Well, Alaska changed their state laws to permit such a trust, and seven more states followed suit since then.

The upshot of the the trust is that it is the owner of record of all the assets, stocks, bonds, property, maybe a car... whatever. But you still get to move the money around, and you get to drive the car. But if you're sued, you can only be sued for *your* property. Which is what, the shirt on your back maybe.

Hey, everybody should setup something like this, yeah? Well, since not every state has this legal structure in place, to set one up from wherever you live will cost thousands of dollars. More if you're out of state. And then thousands of dollars per year to have an in-state trustee manage the trust.

This is not a problem for the group of people who keep stacks of money by the fireplace for kindling (that was funny l123!), but for the diligent postman, this could be a serious drag on his lifestyle.

Now, this news comes to me on the heels of the news of the passage of the bankruptcy "reform" legislation passed by Congress today. I do not know what effect such a trust would have on the estate - heirs relationship, but I cannot imagine that such a Good Thing would be restricted to only living people. I mean the trust doesn't die, right? Like a corporation, it is immortal.

That was going to be my next question. Isn't that the idea behind forming a corp to handle lottery winnings and such?

It really sucks that you have to go so far out of your way to protect your assets.

Is the trust going to take the place of the family legacy?

The Washington Post has a pretty good writeup on the Estate Tax.

I bought some software from Europe and on the form they wanted my VAT number. Click on the wtf button and it told me if I lived in Europe, I'd have to pay 17.5% value added tax. Sounds like sales tax to me. Sounds high too. :eyebrow:

Bruce it is sales tax.

Back to Social Security for a minute...

I have been wondering about the Bush administration's touting of Private Accounts (or personal accounts or whatever the hell adjective scored highest in the freaking focus groups). This PA element, is OWNED, by the person, it's inheritable, it's throttleable (more or less aggressive compositions). I think those are the highlights. Here's my question. I'm not trolling, I'm sincerely trying to understand how this is different from Individual Retirement Accounts?

Seriously, don't IRAs do what the PAs are promised to do? How are they different? I already know about Roth IRAs and non-Roth IRAs, I understand how my 401(k)s work. I think I get most of Social Security.

But the difference between IRAs and PAs, *blink blink*, nuttin.

Help please?

The big difference is that currently, X dollars out of your paycheck go into Social Security, and anything you want to put into your IRA is more out of your paycheck.

In this system, the money going into the private account would come out of what you are already putting into Social Security, so you wouldn't see a change in your paycheck. The two big disagreement points are: whether you will end up with as much money in the long run compared to other proposed Social Security reforms, and whether we can afford to pay current retirees with so much less money going into Social Security.

And what happens if you run out of money in a fund-based system instead of a monthly-payment-based system.