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Tuesday, November 17. 2009Death, taxes, and death taxes
My friend in southern CT recently told me about a third-generation (the grandpa was an Italian immigrant) family-owned flower shop in their town which had to close up shop last month when Mom died. Why? They had to sell their small building to pay the estate taxes. Like a family farm, that is generations of dedication, good will, hard work, and a long-established part of a community down the drain. Furthermore, I like the idea of middle-class families being able to build wealth over generations - and most people who work hard like that too. People like to feel that they are building something for the family's future, and for their family's independence from the kindness of strangers - and the government. I do advise everyone, even if not wealthy, to do the best that they can to avoid the crushing effects of death taxes by getting the best estate-planning advice you can afford. Brit Ted Dalrymple takes on the Fabians on the topic, in Let Them Inherit Debt. One quote: There are many unfairnesses in life that we must learn to put up with, if we are to have any chance of happiness or even of tolerable contentment. For example, I should like to be taller, better-looking and more intelligent and gifted than I am. Every time I meet someone better-looking than I, taller than I, or more talented than I, which I do very regularly, I experience a brief spark of envy. What did they do to be as they are, my superiors? Why did providence, or chance, endow them with characteristics so much more attractive than my own? Needless to say, I never stop to think that, just possibly, some people might ask the same of me when they meet me. Comments
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I don't get it. Powers-that-be complain we in the U.S. do not save enough, but when we do put money away, it is taxed via capital gains, estate taxes, etc.
The government insists it must pay our way: loans for education; social security for widows, orphans, the disabled and everyone else; Medicare for those over 65...what did our grandparents do before this welfare state? And forget planning for future needs or unforeseen emergencies. Laws change daily, making it impossible to anticipate and make contingency arrangements. And those laws require the interpretation of rafts of lawyers and CPAs, adding to the cost of simply "being alive." No wonder the pharma industry is making billions off of anti-depressants. Ron Paul and Gary Johnson are looking better every day. All one can do (if one has the option) is vote with one's feet, and move places without estate taxes as one ages. However, as JMA notes, laws change all the time. I plan to move out of my home of over 20 years once I retire, if the tax laws do not change, for just this reason.
Obviously, I'm not an estate lawyer, but I had to be an executor for parents' estate and learned a little about it. A friend inherited a family house when her dad died, and the family would have liked to let her son (about to marry) live there and start a family (expensive neighborhood, modest home, good school district). But the 50% tax on the estate forced them to sell it, and into a bad real estate market to boot. Awful. THere are stats on how states with high estate taxes lose elderly people with significant assets to states with lower ones (can't find the links, tho). Many people who are not rich, but sitll have enough money for the state to steal a hunk after their death (it is theft, as they had to pay taxes on the money when they first earned it, so why again!?) find the thought of death so unpleasant that they never think thru their estate. Where I work, not a single one of my middle aged coworkers (with college aged kids) admits to giving a thought to estate planning. I reminded them that my younger brother died unexpectedly in his mid 40s and it could happen to any of us, but they say they don't give it a thought. I think a lot depends on the family relationships also. Where there is a lot of love, parents will often be planning for years on how to leave the maximum possible to their kids and/or grandkids. Where there is strife or distance, or a parent who maybe worked like a dog for years and now wants to gallivant and spend in old age, there may be no interest in saving money for the kids, let alone thinking thru ways to avoid taxes. Many of the easiest ways for middle class people to make sure their family get their property rather than the State without or the lawyers (cf: Bleak House) are hard psychologically and can be risky: time was, when one could give away stuff up to seven years before one's death. At least in Taxachusetts in my youth. If one loved (and trusted) one's kids, one could give them one's house and/or money, with the understanding that it was "really" the parent's to live in and have control over until their death. Or if one is not greedy, one could just give $10K a year to every member of the family for the last few years of one's life, with no tax burden. One could put it in educational savings accounts for grandchildren's college, without the expense of trust funds (which require balances too high usually for the average Joe to set up) At the risk of being called selfish i believe it is critical that all right thinking types do all in their power both fair and foul to avoid any and all taxes. With the best endeavours some of course will be paid but all govts have now reached the lows of crude addicts...addicted to our money and I for one have had enough.
It's time to ban all taxes on blood, sweat, and tears. A government should never benefit from the pain of its people.
No death taxes. This is utterly sick. Even with a large exemption, more and more MIDDLE CLASS people are finding themselves subject to death taxes. These include small business owners, farmers, and people who own assets in high cost of living states. No income taxes. You should never have a disincentive to work. Replace the income tax with a VAT and you'll provide an incentive to SAVE and remove the disincentive to work. No taxes on insurance payments or court judgments. These pay you for the grief you've suffered from unfortunate events which were not your fault and your payments don't even cover the costs to replace what you've lost. Judgments should include full replacement cost, including sales tax. My wife and her siblings had a horrible experience with her mother's modest estate. Despite falling under the federal threshold, Taxachusetts grabbed a quarter of her parents' life savings and held up closing their estate for nearly 2 years. Thieves.
The Kennedy's long ago moved most of their misbegotten wealth offshore. No taxes on their Fuji-based oil company when one of them dies. They pay a herd of lawyers and accountants to avoid the taxes they created. Dalrymple is right.
If your estate (i.e., the accumulated worth of you and your ancestors' sweat) is simply to be confiscated at death then I say: Screw that. Give your kids an inheritance while you're still breathing, buy that damned little sportscar, drink more champagne, travel to exotic places and fly business class to get there. Hell, die in debt. Why should you care? Be as profligate with your wealth as you just know the government will be with it. |
House votes to make death tax permanent. I recently posted on the subject of Death, taxes, and death taxes in view of upcoming legislative considerations of current death taxes, and I see a post by Patten at NRO which echoes my views. He explains: Oft
Tracked: Dec 15, 10:43