Rethinking the death tax.....
Posted: Tue Nov 03, 2015 5:52 pm
....and, other stuff I'm learning. Try to keep the response serious, if you can manage it. I think this is a serious subject, and one that has serious effects upon revenue for the government.
Clearly, I'm still at the beginning of the 8-12 month process of probate/executorship of my dad's will. However, I am already learning quite a bit. Much of it is about exactly the extent to which the Federal Inheritance Tax(and state taxes pegged to that one) can be EASILY circumvented, to the point of making the current laws meaningless. For seemingly ever, I've heard about how Estate taxes kill people, rob beneficiaries of hard-earned gains etc, and I'm quite sure that happens, but I'm starting to suspect the only victims of such are folks inheriting real estate, as it is proving staggeringly simple to avoid the taxation limits on cash and securities. Going through accounts, I came across a goodly number of CDs which were set up as POD(payable upon death) to me as a beneficiary. The banker tells me, and it is confirmed by the Registar of Wills, that all of these are IMMEDIATELY my property, no taxes due at any level. Essentially, they can be thought of as a further Life Insurance Policy. OK, cool, I'm ok with this. I mean, we aren't talking of a massive amount of cash, but still a fair little pile. Then, I contact his brokerage. Turns out his major investment account, which does make 8 figures is ALSO set up as POD, to me. I ask, 'how can that be handled, as part of the probated estate?'. 'No, Mr. Slick, I'm told, those are yours immediately with a death certificate and photo ID'. I ask again, 'no taxes, no probate fees, nothing?'. 'Yes sir, nothing, the whole portfolio is yours now, free and clear'. A conversation with them, and later the Registar of Wills confirms not only that this correct, but further that one has no limit on the size of such a transaction. Hence, if one held one Billion dollars of securities, they can be set up Payable on Death, and the beneficiary sees ZERO tax liability. Strikes me as quite unfair, and completely negating the effect of the estate tax even on the very wealthy. I am starting to think that the laws need to be tightened, and perhaps the tax levels dropped from 40% to, say, 20%. Yet another example of how those writing the laws(yes, both political parties) set the rules of the game so as to benefit those at the top of the economic ladder, the rest be damned.
Clearly, I'm still at the beginning of the 8-12 month process of probate/executorship of my dad's will. However, I am already learning quite a bit. Much of it is about exactly the extent to which the Federal Inheritance Tax(and state taxes pegged to that one) can be EASILY circumvented, to the point of making the current laws meaningless. For seemingly ever, I've heard about how Estate taxes kill people, rob beneficiaries of hard-earned gains etc, and I'm quite sure that happens, but I'm starting to suspect the only victims of such are folks inheriting real estate, as it is proving staggeringly simple to avoid the taxation limits on cash and securities. Going through accounts, I came across a goodly number of CDs which were set up as POD(payable upon death) to me as a beneficiary. The banker tells me, and it is confirmed by the Registar of Wills, that all of these are IMMEDIATELY my property, no taxes due at any level. Essentially, they can be thought of as a further Life Insurance Policy. OK, cool, I'm ok with this. I mean, we aren't talking of a massive amount of cash, but still a fair little pile. Then, I contact his brokerage. Turns out his major investment account, which does make 8 figures is ALSO set up as POD, to me. I ask, 'how can that be handled, as part of the probated estate?'. 'No, Mr. Slick, I'm told, those are yours immediately with a death certificate and photo ID'. I ask again, 'no taxes, no probate fees, nothing?'. 'Yes sir, nothing, the whole portfolio is yours now, free and clear'. A conversation with them, and later the Registar of Wills confirms not only that this correct, but further that one has no limit on the size of such a transaction. Hence, if one held one Billion dollars of securities, they can be set up Payable on Death, and the beneficiary sees ZERO tax liability. Strikes me as quite unfair, and completely negating the effect of the estate tax even on the very wealthy. I am starting to think that the laws need to be tightened, and perhaps the tax levels dropped from 40% to, say, 20%. Yet another example of how those writing the laws(yes, both political parties) set the rules of the game so as to benefit those at the top of the economic ladder, the rest be damned.