So... how do you feel about Trustafarians ?

[MacArtist]

I'm supposed to feel sorry for people paying tax on inheriting millions of dollars...whether it's in cash or acres?

Try inheriting nothing.

[$tevie]

I did try that, as a matter of fact, and I think I'd probably have preferred paying an inheritance tax.

[JoeH]

One thing to add that I forgot in my earlier post, that $5 million exemption is per each spouse on joint property. They also recently added a provision that the surviving spouse could use any unused exemption of the deceased spouse. So it the deceased spouse had only used $2 million, the surviving spouse can use the remaining $3 million plus their own exemption of $5 million.

[Ted King]

Bill in NC wrote:
The article seems to say that the trust was funded by Romney's after-tax dollars.

And that Mitt is currently paying the taxes so the trust assets can accumulate.

After his death the kids still pay income tax from trust earnings, since it is a pass-through entity.

In their case trust income will probably be from investments, so they'd likely be taxed mostly at the long-term capital gains rate (15% this year, but rising to 24% in 2014)

If instead the trust held commercial buildings that were rented the kids would pay at ordinary income rates.

Plus any state taxes based on where they reside.

[quote=Ted King]
like the Romney children - is that they could live off of their trust fund money without paying any federal taxes at all. That's just flat out wrong.

Here's the whole quote of mine that you excerpted from:

The most troubling aspect of this for me, though, is the move by a Republican politicians in general to push for getting rid of estate (inheritance) tax, corporate taxes and capital gains taxes altogether. What that would do for the very wealthy - like the Romney children - is that they could live off of their trust fund money without paying any federal taxes at all. That's just flat out wrong.

Notice the part that I put in bold this time about the push to get rid of taxes like capital gains taxes. Since I mentioned that specifically I don't understand why you brought up that they would probably be paying capital gains taxes. As to some kinds of investments like rental properties - notice that (I also put in bold this time) I said "could". That is, I didn't say they would, I said the could. If there were no capital gains taxes as many Republican politicians are pushing for, the Romney kids could live off the income from their trusts without paying any federal taxes. And notice that (I also put in bold this time) I was specifically referring to federal taxes - I didn't say anything about state and local taxes. So I'm not sure why you mentioned those.

[Lux Interior]

Few Wealthy Farmers Owe Estate Taxes, Report Says

Story is old, but since Obama hasn't changed much regarding the tax laws, it should still be relevant.

cbelt3 wrote:
Any family that owns a business of significant value (> $5M) would have to mortgage or sell it outright in order to 'keep it in the family', unless they do significant estate tax planning.

If you have $40 million in assets, you should be doing significant estate tax planning. Once you are in that category, managing your money is a full-time job. If you aren't doing it, you should be paying someone else to do it.

Personally, I shed no tears for the beneficiaries of multi-million dollar estates that "only" inherit $5 million tax free and 65% of the rest.

[Bill in NC]

A family farm isn't going to generate enough cash to pay that bill, even if it is 'only' 35% over the exemption (though it resets to 55%, with only a $1 million exemption as of next January)

So, the farm gets sold, usually to a developer, whether or not the family wants to do so.

For a small business, they might be able to borrow enough to pay the bill (normally due within 6 months), but the cash to service that loan has to come from somewhere.

And since payroll remains the largest variable cost for most business, reductions in that category are what will pay for the loan.

The above is the reality of the estate tax as it currently exists - it is charged on ALL assets, not just cash or other liquid assets.

We might agree that an operating farm or business should be treated differently than cash in the bank, but that is currently not the case.

[Lux Interior]

Bill in NC wrote:
The above is the reality of the estate tax as it currently exists

If that was true, then there would be no family farms or small businesses. They would all be sold as soon as the original owner died.

[Acer]

With Lux, here. I'd need to see some statistics on the family farm issue. Got lost of farmers in my family, and most of them "retired" from the farm and passed it along in some manner to their children long before they died. I'd imagine they made them a partner, or sold it to them under a version of "owner financing" with favorable terms.

I suspect the loss of the family farm comes about more often when the next generation does not WANT to farm, and then it must be sold off. Again, in my family, THAT's when the farm was "lost."

[haikuman]

Maybe everybody should own one *(:>* :devil: a Trustafarian and a Farm *(:>*

[$tevie]

Acer wrote:
With Lux, here. I'd need to see some statistics on the family farm issue. Got lost of farmers in my family, and most of them "retired" from the farm and passed it along in some manner to their children long before they died. I'd imagine they made them a partner, or sold it to them under a version of "owner financing" with favorable terms.

I suspect the loss of the family farm comes about more often when the next generation does not WANT to farm, and then it must be sold off. Again, in my family, THAT's when the farm was "lost."

I am inclined to agree with you.