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Thursday, April 3. 2014
(I am also opposed to gift taxes which limit how much one can give to a family member, or anyone else, without a tax penalty, but that's another topic.)
I do understand that the greedy government wants any money it can get, from any source, and I also understand that estate planning for the wealthy employs thousands of attorneys and accountants who might otherwise have little to do.
What's wrong with the idea that, over time and over generations, there would be the freedom for families to accumulate assets for the benefit of their present and future kin? The more, the better. Financial independence to some degree can be either a blessing or a curse, but, contra Teddy Roosevelt, that's not government's proper concern. I have seen family businesses, farms, and family vacation places destroyed by estate taxes, and it seems wrong to me.
Here are my poll questions - assuming you and spouse have died:
1. Do you want to leave any assets to your kids, grandkids, relatives, friends, or do you want to die broke?
2. What % of your estate would you wish to give to charities?
3. If you have one prosperous kid and two middle class or poor kids, would you write your will differently for them?
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1. I want to leave good assets for them.
2. 10%, as I always have done.
1. It's tough to arrange to die broke and not be on the dole, so a properly setup transfer to heirs can be a leg up.
2. If I were donating before death maybe, but its awfully morbid.
3. Equal Shares but if kids want to divvy it up otherwise they can decide.
If you plan ahead, you can distribute your assets well before you pass away. If you are smart, you will. It can be done, I have seen it happen. Next question?
1. To the kids, mostly
2. Having made my donations to charity during my life, I would leave the disposition up to my heirs.
3. Possibly....depending on circumstances at the time. A good reason for regular review and revision of wills.
1. Mostly to kids. Don't have grandkids yet, but I'd expect that I would include them.
2. Agree exactly w/ Rick in comment #4
3. It would depend on circumstances. Why are some of my kids struggling? Regardless, I would try to give sentimental items to the one to whom it's sentimental.
1. None to relatives.
2. Donate all to furthering the Gospel of Jesus Christ.
3. No children
1. closest would be my nephews... No children of my own.
2. haven't seen a charity worth giving a cent to that didn't get more than it deserved from my taxes.
3. no, why should I? I'd have given them the same treatment in life, so why change that in death?
I'm in interested party in this: seventh generation on an old estate in southern New England, a typical sort of one: 1800's house in good shape, over a hundred acres of prime farmland (read all easy to subdivide and develop), and no liquid capital. A situation even more common in areas with farms, businesses, that sort of thing: not enough liquid capital to pay both the annual property tax, federal income tax, state income tax, maintenance, insurance AND enough to pay the estate tax within the required time.
Now, either we get nailed repeatedly on gift taxes or we get nailed on estate taxes. Either way, land has to be sold.
How many farms, landowners, and businesses get destroyed each year by this blight? (I know of more than one farm that saw the dispersal of carefully maintained breeding stock in order to pay the estate tax: you can't get those genetics back anymore than you can recreate farmland.)
If you've owned it for generations, the chances are pretty good that you or your heirs are Very invested in keeping it maintained with an eye towards long term stability and not a quick buck. I don't see this as a bad thing...
If planned properly, you've shared your wealth with your kids while your alive to enjoy it with them. Leaving large estates creates all kinds of bad family/moral dynamics.
Your last check should be to the mortitian and it should bounce. If there's a bit left over because you've planned your spend rate more conservatively, that should be distributed equally.
Having been through the process of wills and inheritances twice now, my answers are the following:
1) Yes, because gaining assets from an inheritance really helped me when I needed it most. I would want to do the same for my children, if I could.
2) Yes, if I had the means. If I don't have much left to hand out, I'd probably want the majority to go to my children.
3) I would be equal to all children. Post-death greed can be an ugly thing. I would rather not make my last stamp on this earth something that might cause disharmony between siblings or give anyone the impression I loved him or her less based on $$ left behind for him or her.
My note to all: PLEASE make sure you have designated beneficiaries on your life insurance policies and investment accounts. Do not put 'my estate.' Also, a reminder that life insurance can be received almost immediately and has no tax penalty. If you can afford to, buy a decent-size life insurance policy. Your spouse and/or children will be instantly better off with very little effort. Divesting of 401(k), IRA's, etc. is time consuming and can take months and months and months of time and trouble.
1) Dying broke is bad. Everyone should have some kind of savings for unexpected expenses. Whatever is left can be distributed.
2) I don't have much of an 'estate', I don't go to church and my kids would probably benefit more than most charities. Too early to tell.
3) Fairness vs most benefit? I would hope that if the 'estate' is split equally, that the better-off kid would volunteer a larger portion to their poorer sibling.
I did that when my father died.
The disposition is really secondary.
I worked hard and earned it. I paid taxes on it. I saved it for my benefit.
1.) Yes. To my children and any future grandchildren.
2.) Maybe. I've donated throughout life.
3.) No. Life is a lesson, they'll figure it out.
Note: I'm planning on taking MissT's advise, from what I understand Bill Gates has done this, too.
I love my children too much to leave them money. Just as important I think is to make sure they know this ahead of time. Igive them help from time to time and carefully calculated gifts but there will be no big inheritance. They know their success in life is up to them.
Alright, it is straightforward with liquid capital. Or should be, if you plan.
But, what about several heirs and one piece of land or one business? The argument can be avoided if the land can just sit there, it Cannot be avoided if the estate tax has to be dealt with and there is not enough liquid capital to cover. (BTW, if we followed the British entailment, I'd be the spinster, unentailed daughter. I would still prefer entailment over the estate tax)
1. Yes, to my descendants.
2. Zero. My charitable impulses have been overtaken by my resentment at forced 'charity' via taxes.
3. No. I've seen it done that way and it creates huge ill-will. Even is the way to go. I might make an exception if one child needed on-going medical or supervisory care, but I wouldn't punish a child for being successful -- and that's how it would be received, emotionally.
"A good man leaves an inheritance for his children's children" Proverbs 13:22
1. All assets will be left to children. I'm not sure if it's a native American saying or not but I subscribe to the philosophy that "we haven't inherited the earth from our parents but have borrowed it from our children.
2. No portion of the estate will be given to charities.
3.No. Each child shares equally.
My family has left zero for succeeding generations, ever since arriving here from Sweden many moons ago. I might just change that practice, though I'm still mulling things over. My wife's family operates on a different standard and I haven't noticed any great genetic rot creeping into the generations, so perhaps my family's fears are, while certainly not groundless, on shakier ground than I had thought.
1) All of it if I have anything left.
2) Nothing. I have donated to charities all of my adult life and I feel that most of them have ripped me off, mostly by supporting leftist (Liberal, Socialist and Communists) groups.
3) I have always treated my three children equally; why should I change.
Yes, die broke or as close as possible. Two kids both with no education debt as their best inheritance, shared their grandparents heritage when it was distributed. Let them enjoy it - both are sensible and won't squander.
No charities - if I want to contribute I'll do it while alive. I have a lot of sympathy with the viewpoint "I've already contributed through the IRS".
Both equally, although if there are grandkids they will share directly.
1. Yes, I plan to leave assets to children and children's children. Some of which will start arriving at age 21& age 40 *been set up that way in my family for several generations. However, my only change is that I am educating my children about roles/responsibilities of assets ahead of time rather than have dumped on at 21 with zero clue how to manage correctly
2. I try to give 8-10% now. May do one-time donations upon passing or add to family foundation
3. No. It won't be a matter of monetary prowess on their parts, it will be a matter of maturity. However, assets are already in place to pass down. Remainder will be family treasures, sentimental items, special jewelry that will be designated.
The biggest thing, in my opinion is, no matter the amount of the estate now or in the future . . . if the future generations are not educated as to how to handle assets and finances in a positive manner, then the future generation is potentially shortchanged no matter the intentions of the family.
1. Leave as much behind as possible.
My inheritors, assuming I survive my wife, will be very distant relatives. Or the waitress at the local diner who was kind to me.
1. Yes I want to leave assets to my kids, grandkids, relatives, friends, after my wife and I pass. Who knows how much that will be though with the way the 'real' inflation is going these days.
2. Something like 10% to charities ... maybe more when it comes to liquidating all the stuff around the house.
3. Share the same - let the kids decide if they want to alter the percentages.