Proposed "death tax" may kill the family farm?

[TexasBred]

Jo, You are absolutely right about that. The exemption needs to be raised instead of it falling back to the $1 million. At least keep it at the $3 million or raise it higher. Gotta get those congressmen to work for us to do it though.. :bang:
As far as a trust goes.. you would still have to pay the inheritance tax. Only way to "avoid" it is to have it in YOUR name before the death of your relatives.. Not sure about what a joint ownership would do though.

There use to be a time factor involved in that as well in order to avoid the "contemplation of death" clause. Seems like you had to live 5 years after deeding it to your children otherwise IRS could rule it was "contemplation of death" and an attempt to avoid taxes and collect anyway.

 

[Jogeephus]

They still have that and they can get you on the gift tax which I think is 55%.

 

[Anonymous]

But if you incorporate, it all becomes its own entity that never dies. President or vp dies, choose a new one.

 

[Jogeephus]

But if you incorporate, it all becomes its own entity that never dies. President or vp dies, choose a new one.

Yes, but you are confusing leadership wiht ownership. You don't tax leadership but you do ownership. So how would this have anything to do with limiting your death tax bill?

 

[Anonymous]

Nothing to die= no death tax. Transfer ownership of assets to the corporation. Unless I'm not aware of something , that wouldn't suprise me

 

[Limomike]

But wouldnt those assets still be taxed upon the death of the owner?

 

[Jogeephus]

But wouldnt those assets still be taxed upon the death of the owner?

Most definitely. Of course it will only be at whatever the death tax rate is. In Georgia it will soon be 61%. (55 to fed and 6 to state) Or you can give it to your children within five years of your death and they can siimply pay the gift tax which just so happens to be the same as the death tax but at least you got around the death tax.

Of course you could always give everything to a hospital or a state college and they will name a wing after you and everyone will think you are a great philanthropist and they can then pay 6% of the value of the gift to the person of your choosing for the rest of this person's life. This is a good option assuming the person of your choosing lives long enough to cash in the full extent of the gift.

Of course you could always convert to one of those religions where polygamy is allowed and marry your son's fiancee and then she can marry your son after you die. Of course with equal rights I don't see why she couldn't be married to both of you at the same time of course I'm not Mormon or Muslum so I don't know how that works. Of course this does give great food for thought as to why the government is so against polygamy but so pro same sex marriage.

 

[Limomike]

Man, jo.. you sure conjure up some thoughts... hmmm... :drink:

 

[Anonymous]

If the corporation owns it, how can they death tax it?
Lets say I have 2.5m in assets. Mainly land holdings. If I quit claim those holdings to a corporation that I start, the corp now own those holdings. Not me. If I die in 1 year or 20, it can't be death taxes because its not mine. It's the corporations holdings. I've got to be missing a key component to this thought.

 

[highgrit]

That would be to easy Hook. The Lawyers and CPA's aint gonna let it happen.

 

[Jogeephus]

Hook, somebody owns the corporation. A corporation's ownership is in shares of stock. If you own it and you set up a corporation then YOU own all the stock so when you die the stock is an asset that belongs to YOU. You can't give it to your son because this would excede the gift tax threshold and then he would have to pay 55% to the feds for what you gave him.

This is the problem with the $1 million dollar limit. When you start appraising land and other things your net worth adds up fast. Much faster than people realize. I know people who are worth a million dollars but can barely pay their taxes or their light bills. It sounds like a lot of money and it is but when its property and all other assets it doesn't take long to find you are in big trouble with the tax man. This is why the middle class is getting squeezed out and after someone's death most small businesses must close their doors.

 

[Anonymous]

THats the part I was missing. I forgot about the stock ownership. I incorporated too many years ago and haven't thought about the stock side since then

 

[Dave]

The cure is to spend it all before you die.

 

[Jogeephus]

The cure is to spend it all before you die.

You are right and that goes back to what I was saying about making financial decisions that is not good for the small business. I mean, if the backbone of this country is small businesses we should have a tax code that encourages small business growth. The deat tax does just the opposite. Rather than build a business it pays you to destroy it after a certain point. Just doesn't make sense to me.

If you haven't been thinking about it and doing the neccessary stuff they could easily pierce your corporate veil anyhow.

Of course another way to handle it is just not to die - on paper anyway. Hook, once you install the walkin freezer you can just tell dead-eye to stick your dead carcass in the freezer till all the stock can be gifted to him. It might take a little while but hey - dead's dead right and in the ground or in the freezer there really isn't a big deal. I actually know someone who considered doing this with their father. Their father would have been in full agreement because had he only died three days later it would have saved the family a quarter of a million dollars. Had it been me, I would have haunted my kids had they not done that to me.

 

[Anonymous]

There's a plan right there. I'll hold off on telling him though because he might get a bit antsy to get to the point of things and lock me in before its time. Or I'll just wait until 12-21-12

 

[cow pollinater]

This is the problem with the $1 million dollar limit. When you start appraising land and other things your net worth adds up fast. Much faster than people realize.

:nod: That's where farmers really get burned. Bankers want you to be worth 50% of the debt you want to take on before they'll consider lending so just the ability to buy into farming for a living puts you in the catagory of eligable for the death tax even though the return on a million dollar farming operation is nowhere near what it would likely be on any other million dollar investment. If you've farmed and payed down debt for twenty years there's no way to avoid being raped, excuse me, taxed after you die.

 

[Jogeephus]

I am neither a republican or a democrat just an american and I fault both sides of the isle for not addressing this in a sensible manner. Our country's future depends on the small businesses to be healhy and be in a position to grow and create jobs. It may take a lifetime to build a business and for it to be wrecked by congress's abuse of the intent of this law I think is criminal because we all suffer as a nation. I am not saying we should not have a death tax because I think we should. I'm just saying the exemption should be adjusted for inflation each year so small businesses can plan for the future and have some degree of confidence of what the tax code will be. As we are now, its like having a marathon runner giving it his all and when he passes the baton to the next person this person is blind-sided by the government. Just doesn't make sense.

 

[Nite Hawk]

So far we don"t have death taxes here, but of course that is always subject to change. The reason I posted this is I know alot of you folks out there do have death taxes, and it isn't fair for the government to rip you off or your kids or whoever after you are gone.
I am wondering if you can legally "sell" portions of your property /assets to who ever "on paper" for "XYZ" amount, retaining a portion for yourself, if it might be done that ways??
Like "selling" a car for "$1.00" on paper so it isn't comsidered a "gift". Although I am sure the Feds would protest if you "sold" your property for "$1.00" to each of your heirs, and there maybe a clause that would say it wasn't proper value or something like that.
I have heard land trusts used to be basically non taxable, and that was how the rich used to get around paying taxes, as long as some of the trustees were still alive no taxes would be charged, so trustees were continually added to the trust.
Now I know laws continually change, but if it works the only one who would be complaining would be the feds...
Nite Hawk

 

[Arkansas]

Well you can do it as my family has always done! You can sell it to your son or daughter before you pass when things get bad just like a car. You determine what you want to sell something for so the government has no say so then.

 

[TexasBred]

Well you can do it as my family has always done! You can sell it to your son or daughter before you pass when things get bad just like a car. You determine what you want to sell something for so the government has no say so then.

I've seen it done....deed says for "$10.00 and love and affection".