Olympian: Business owners take steps to avoid hit from estate tax

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Olympian: Business owners take steps to avoid hit from estate tax

Submitted by The Fire Inside on Mon, 10/16/2006 - 5:57am.

I never could understand how the government is justified in not only taxing you to die but also taxing money that has already been taxed.

The Olympian:

Business owners take steps to avoid hit from estate tax:

But that preparation [of ownership transfer to the next of kin] - which [Lew Rents owner Dean] Eklund said can cost $50,000 to $60,000 including legal, accounting and appraisal costs - is pricey and additional costs mount up if insurance is purchased to help the next generation deal with the tax bills. Then, Eklund said, there are questions or uncertainties- for instance, would the company's banker continue offering lines of credit to the next generation?
And a bill for estate taxes, when combined with a federal estate tax of up to 47 percent for enormous estates, adds stress at a time the business already is under tremendous pressure to survive, Eklund said.

The Fire Inside's blog
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an odd issue

Submitted by enpen on Mon, 10/16/2006 - 9:55am.

I've struggled with the issue of inheritence quite a bit. Is inheritance a good thing for the long term health of a society? Is it socially destructive?

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

Are we talking Hilton

Submitted by Norm on Mon, 10/16/2006 - 10:04am.

Are we talking Hilton sisters here or man in his 50's who uses it to open a bookstore downtown?

unfortunately

Submitted by enpen on Mon, 10/16/2006 - 10:09am.

I think we have to take'em all into account. The Kennedy troupe, the Bush twins, the Hilton sisters, the Rockefellers, the mom & pop store owner, the family farm, etc.

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

I'm pretty sure a family

Submitted by The Fire Inside on Mon, 10/16/2006 - 10:12am.

I'm pretty sure a family farm is exempt from being taxed this way.

depends on the value

Submitted by enpen on Mon, 10/16/2006 - 10:20am.

In the State of Washington an inheritance tax kicks for estates with a value greater than $200,000. As far as farms are concerned, you're able to deduct the value of the farm land from the total value of the state to try to get it below/nearer to that number. Of course, corporate farmland isn't counted as there's nobody to die so there's never an estate to inherit...

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

I think your number is

Submitted by Mike on Tue, 10/17/2006 - 5:57am.

I think your number is off. I don't work in estate law, but I think the threshold is more like a paltry 2 million. Will check in later today with the estate law folks and verify.

Yep, 2 million

Submitted by Mike on Tue, 10/17/2006 - 11:40am.

is pretty easy to exempt under existing estate law. You may be able to go more on a true "family farm" but the standard for a true family farm is strict. Check with your atty

I think one could probably

Submitted by The Fire Inside on Mon, 10/16/2006 - 10:08am.

I think one could probably argue that it is good for the "long term health of society," because I think that the economics (from the little I can understand) behind such policies are necessary.

I just don't think the tax is fair in even the least amount. While distributing wealth in a more equal manner may very well be a necessary evil in order to maintain a functioning and continually growing economy and society, I think one has to ask themselves if they are alright with using democracy in the most extreme form ("Democracy is two wolves and a lamb voting on what to have for lunch.") in order to condone the use of force to impose their will on a small minority of the population.

I also think making death an event which can be taxed is a bit...wrong?

?

Submitted by enpen on Mon, 10/16/2006 - 10:16am.

"because I think that the economics (from the little I can understand) behind such policies are necessary."

Why?

As far as inheritance is concerned, couldn't it be seen as an anti-democratic thing? Doesn't it promote aristocracy?

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

Isn't that the point of life

Submitted by Norm on Mon, 10/16/2006 - 10:30am.

Isn't that the point of life though? Make a good living, build a nice home, have a few kids, and when you die you give them that to help them out in their lives. Why would you even bother if everything you cherish goes to strangers? Or should we all live as nomads?

the meaning of life

Submitted by enpen on Mon, 10/16/2006 - 10:48am.

In many ways I think our social ills exist precisely because we can't see past the individual experience and recognize the value of working toward species viability. What if there were some provision, such as, when you die you're able to apportion X amount amongst your direct descendants, and the rest goes to something like...education?

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

And some individuals do that

Submitted by Norm on Mon, 10/16/2006 - 10:52am.

And some individuals do that upon death, they donate some or all of their estate, but shouldn't that choice be left to them? Doing away with inheritance ( I loathe the hilton sisters...but ) sounds like a step towards communism. We'd have what, 2 or 3 generations after this and then everyone would essentially be the middle class. Although I think there needs to be less separation, I don't think that just up and removing the separation is a good idea.

"the middle class"

Submitted by enpen on Mon, 10/16/2006 - 11:25am.

I like how that's uttered like a dirty word. Of course, the middle class in America is extremely wealthy (materially) anywhere else in the world. But seriously, can you imagine the intellectual value of our society if the vast majority of estates went to fund education? We'd be able to effectively treat knowledge as a commodity on the open market.

[Edit] I meant to type "almost anywhere". Tokyo, London, Paris, et al. obviously don't apply.

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

I'm not talking the

Submitted by Norm on Mon, 10/16/2006 - 12:15pm.

I'm not talking the "middle-class" we have now, it would be something else entirely. If there is no longer an upper-class, and everyone's estate goes into a public fund and helps out the poor, we'd essentially be creating a new middle class. At least that's my perception. I still really don't think I'm ok with that. Too much government control for my taste.

No more silver spoon

Submitted by Jade on Mon, 10/16/2006 - 6:44pm.

No more silver spoon deliveries...what a shame.

Folks like George Bush being forced to earn money through work and ingenuity instead of being endowed with it from their ancestor's peculiar institution or manifest destiny. Not in the land of the free!

Jade

You're talking the extremes

Submitted by Norm on Mon, 10/16/2006 - 6:54pm.

You're talking the extremes here Jade, don't forget about the little people too. Inheritance doesn't only happen with the incredibly rich.

If I got an inheritance, I

Submitted by Jade on Mon, 10/16/2006 - 8:49pm.

If I got an inheritance, I hope I would be a little more humble about my good fortune than to whine about my free, unearned money being taxed. As it is, other people's inheritence paid for my dying father's medical care. I'm thankful for that, though I still get hospital bills for him...

Jade

Ack, sorry Jade. Maybe I

Submitted by Norm on Mon, 10/16/2006 - 8:57pm.

Ack, sorry Jade. Maybe I hopped onto the wrong sub-thread. I'm not necessarily talking about the tax, I'm talking about doing away with inheritance. Enpen mentioned something about inheritance being simply given away entired to public funding. Either way, I didn't mean the taxation ( although that can be steep I'm sure ) I'm referring to losing all funds to the government once you die.

Oh, ok. That's a different

Submitted by Jade on Tue, 10/17/2006 - 12:28am.

Oh, ok. That's a different conversation.

Jade

as well

Submitted by enpen on Mon, 10/16/2006 - 11:37am.

I'm also not advocating the inability to accumulate personal wealth in one's life time as a course of hard work/a good idea/theft/other things I'm not thinking of. But it's a misconception that our society values hard work & good ideas in any kind of pure form.

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

Inheretence can (and in most

Submitted by The Fire Inside on Mon, 10/16/2006 - 10:38am.

Inheretence can (and in most instances probably does) create an aristocracy ("the most powerful members of a society"). But is it fair to take from a segment of the population simply because they (or their kin) were successful in their endeavors and able to enjoy the economic benefits? There is a top to society just as there is a bottom (and everything in between) and I don't think the purpose of government is to discriminate against any of them.

fairness

Submitted by enpen on Mon, 10/16/2006 - 11:21am.

"But is it fair to take from a segment of the population simply because they (or their kin) were successful in their endeavors and able to enjoy the economic benefits?"

Is it fair that the Rockefeller descendants reap the rewards of chance when the descendants of those that John built his fortune off of continue to live in poverty? The issue that I brought up, though, isn't one of fairness in the immediate sense, it's of longterm social viability (winning, in your terms). Of course, if you want to play the fair game, I have the 20% of America has 80% of the wealth card to pull.

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

Maybe I was too wordy in my

Submitted by The Fire Inside on Mon, 10/16/2006 - 2:03pm.

Maybe I was too wordy in my original response, but I wasn't trying to make a case against the long term benefits and "viability" of income and wealth flowing between the top and the bottom.

More than likely it's necessary. I'm concerned with how that wealth is being shifted, though. Warren Buffett didn't need another entity or society to enter into his domain and plunder whatever they saw fit to take.

heh

Submitted by enpen on Mon, 10/16/2006 - 2:49pm.

Warren Buffett is doing precisely what I'm advocating, in that he's giving back the vast majority of his wealth to the system that allowed him to accumulate it in the first place. My problem does not lay with the individuals who have that mindset, my problem lay with the those that seek to hoard power through wealth for their family. You regularly preach the ideals of the free market and capitalism but inheritance on a power protecting scale is contrary to those ideals.

Buffett, for example, is quite content to keep his children amongst the elite regardless of whether or not they could have earned that money sans dad. Do I blame him? Not at all. Besides, Buffett also knows they've already been provided with a world class education and they have all the connections with the world's elite that can lead to making more money snorting into a champaigne glass than an twenty lifetimes of back breaking labor. Even still, Buffett himself believes that having a vast fortune and allowing it to be inherited "flies in the face of a meritocratic society". It seems odd that you would choose as an exemplar of your position a person who is far more likely to agree with my contentions than with your own.

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

And yes that's great for a

Submitted by Norm on Mon, 10/16/2006 - 3:16pm.

And yes that's great for a man like Buffett, but what about the lowly folks who aren't billionares? What if you'd like to help provide for your family after death? Send your grandkids to college maybe? I just really cannot advocate for the taking away of that choice to put the hiltons through some real life experiences. I think the little man would suffer.

hmmm

Submitted by enpen on Mon, 10/16/2006 - 4:27pm.

Of course, the interesting thing here is that what I'm advocating would make it unnecessary for people to have to worry about sending the grandkids through college, as that'd be provided for by the state (as it should be if we want an educated, happy and democratic society). And I'm certainly not advocating for taking away "all choice", much less all financial choice. I still think that you should be able to spend your money on whatever the hell you spend it on (providing it doesn't delete somebody else's free will). I'm advocating for an end to the suffering of the "little man". That's what amazes me about this all. If we did away with all inheritance punishments then we'd see our society become even further entrenched in aristocratic leanings with a net result of even more "little" folk gettin' stomped on by the wealthy elite.

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

I can give you the names of

Submitted by Mike on Tue, 10/17/2006 - 6:02am.

I can give you the names of three very competent estate planning attorneys who can help you set up trusts while you are alive to manage all the things you mention. There is no need to rely on inheritance to do the things you mention. In fact, it is a crap shoot and very poor estate planning.

That's my missing component.

Submitted by Norm on Tue, 10/17/2006 - 8:18am.

That's my missing component. Both my Grandparents and Parents have gone over the basics with me but not the inner-workings. I'm sure I'll learn more about it as I get older and ( maybe ) have kids of my own. Thanks for bringing that to the conversation Mike.

What?

Submitted by The Fire Inside on Mon, 10/16/2006 - 3:28pm.

Where did I say in this thread that those with wealth should not exercise free will and volunteer to give the vast majority of their wealth back?

Again, I am not arguing against choosing to give your money back to society at large. I think that is what should be done.

I am, however, completely against the mentality that because you have a "problem...with those that seek to hoard power through wealth for their family," force should be used in order to redistribute that wealth.

Evidently, Buffett is also in agreement that force is a necessary tool ("Capitalism also falls short as a distribution mechanism for billions of people who are not born lucky.").

are you paid by the missed point?

Submitted by enpen on Mon, 10/16/2006 - 4:40pm.

"Where did I say in this thread that those with wealth should not exercise free will and volunteer to give the vast majority of their wealth back?"

eh? Where did I explicitly, or even implicitly state anything that could possibly warrant that response? Seriously, what post are you reading?

"I am, however, completely against the mentality that because you have a "problem...with those that seek to hoard power through wealth for their family," force should be used in order to redistribute that wealth."

And I'm saying that such a policy of wealth maintenance through the ages leads to an aristocratic and slave market society. Ultimately you're advocating a position that causes all of your other Libertarian political leanings to be untenable as a result of the solidification of power and land holdings. And yes, I'm aware of Buffett's agreement with my position; precisely why I thought it odd you chose him to exemplify your stance.

"If you are a dreamer, come in. If you are a dreamer, a wisher, a liar, a hope-er, a pray-er, a magic bean buyer. If you're a pretender, come sit by my fire, for we have some flax-golden tales to spin. Come in! Come in!"

I chose his actions because

Submitted by The Fire Inside on Tue, 10/17/2006 - 5:51am.

I chose his actions because he did so on a voluntary basis. I didn't realize that he believes force should be used in order to achieve those ends, though.

watch out below!

Submitted by enpen on Tue, 10/17/2006 - 3:15pm.

"Look before you leap for as you sow, ye are like to reap."

When you are dead and the

Submitted by Mike on Tue, 10/17/2006 - 5:54am.

When you are dead and the government takes your money, it really shouldn't inconvenience you much. There are gift laws and all sorts of corporate vehicles for conveying wealth to others while you are alive if that is important to you.

I support taxing estates. If the heirs of the wealthy want to be rich they can get out and work like their parents did to accumulate wealth. If that hard work ethic is the basis for providing little or no social service to poor and sick folks in our community, why not support it with the heirs to large fortunes?

A certain consistency in philosophy and approach indicates a true set of values instead of political talking points.

When you are dead and the

Submitted by The Fire Inside on Tue, 10/17/2006 - 5:59am.

When you are dead and the government takes your money, it really shouldn't inconvenience you much.

So it wouldn't inconvenience you if the government taxed you to die, no?

No, it does not. My parents

Submitted by Mike on Tue, 10/17/2006 - 6:12am.

No, it does not. My parents and I manages both of their estates without any need for probate or wills through gifting and trusts and legal instruments that transfer wealth on death through right of survivorship. We are not talking about large estates, but the tools work the same without regard to the size of the estate.

I will probably give most of my estate to my children one way or another while I am alive. If I planned so poorly or my estate was so large that I could not see to it's dispensation without paying tax it would not bother me a bit.

I already pay all kinds of taxes, I don't mind paying taxes. I look around and see schools, roads, libraries, good community policing, fire departments, public parks and I think good public infrastructure driven by taxes. I look at military weapons and see my tax dollars going to kill people on the other side of the planet and I think, bad use of my tax dollars, and I work to change the public policy that determine where my tax dollars go, but I do not mind paying taxes.

That whole "I don't want to pay any taxes, it isn't fair" is part of that red, white, and blue christianity, some kind of everyman for himself greediness elevated to a philosophical level that really is just greed with talking points. It's not pretty. It's not an elevated or principled philosophy.

My $.02

If I planned so poorly or my

Submitted by The Fire Inside on Tue, 10/17/2006 - 8:07am.

If I planned so poorly or my estate was so large that I could not see to it's dispensation without paying tax it would not bother me a bit.

So you're not against the ability to keep wealth within a family so long as the individual planned ahead of time? I didn't realize the state had first priority to acquire one's wealth upon their death, regardless of the level of planning.

some kind of everyman for himself greediness elevated to a philosophical level that really is just greed with talking points. It's not pretty. It's not an elevated or principled philosophy.

It's principled in being against the use of force in order to impose one's own will (in this case, society's) upon another being.

I may think certain birth control methods are wrong (certainly abortion), but I have yet to advocate that the state should step in and prevent people from acquiring these goods (just as I do not support the state stepping in to force an individual to provide).

What I am saying is that all

Submitted by Mike on Tue, 10/17/2006 - 12:19pm.

What I am saying is that all the talk about the death tax is a solution in search of a problem. There are costs and taxes that accrue with good estate planning. It is not a free ride to transfer huge amounts of wealth between generations under existing law, but it is possible.

Your concern about coercion and force in the tax arena does not coincide with your enthusiasm for total war.

Again, if your principles are not just talking points, they will show and be consistent.

The estate laws do not need to be changed. There are ample provisions for passing on wealth. There is some cost. It is modest but folks like the Walton family and Howard Rich don't want to pay anything. When you champion bogus concerns about "death taxes" you are playing the fool for some fabulously wealthy families who want their aristocrcatic aspirations further entrenched. It is class warfare that these folks are waging.

Your concern about coercion

Submitted by The Fire Inside on Tue, 10/17/2006 - 12:44pm.

Your concern about coercion and force in the tax arena does not coincide with your enthusiasm for total war.

My enthusiasm for total war is only in the context of war.

Your enthusiasm for coercion

Submitted by Mike on Wed, 10/18/2006 - 6:16am.

Your enthusiasm for coercion only goes with total war. Hmm... My enthusiasm for coercion may only go with estate taxes. hmm... selective enthusiasm for coercion? Who gets to choose when and where coercion is allowed?

Hmm... That isn't fair.

Maybe coercion is the problem? Probably not as long as you have the biggest club in the fight. That's an elevated philosophy.

For what it's worth, I don't

Submitted by The Fire Inside on Wed, 10/18/2006 - 6:19am.

For what it's worth, I don't believe in using Total War against your own countrymen during a civil conflict.

But your point is well-taken.

William Tecumseh Sherman.

Submitted by Mike on Wed, 10/18/2006 - 6:20am.

William Tecumseh Sherman.

Exactly.I disagree with that

Submitted by The Fire Inside on Wed, 10/18/2006 - 6:22am.

Exactly.

I disagree with that decision only because the people Lincoln sent Sherman down to destroy were his own.

Any restraint in your

Submitted by Mike on Wed, 10/18/2006 - 6:22am.

Any restraint in your enthusiam for total war is welcome.

Whats wrong with paying taxes?

Submitted by bubbaz (not verified) on Mon, 10/16/2006 - 11:38am.

Whats wrong with paying taxes?

Its how I support my troops...

It's not death that's taxed...

Submitted by CIAGuy on Mon, 10/16/2006 - 1:29pm.

it's income. The dead person is gone and can't pay anything. the folks who inherit the money pay on income they didn't earn. should we only tax earned income, like wages and salries and not this and other forms of unearned income, like capital gains? Another screwing for the Working Stiff.

all good points, ciaguy, but

Submitted by Mike on Tue, 10/17/2006 - 6:16am.

all good points, ciaguy, but Norm is worried about communism.

Actually, Norm, isn't communism a little passe? Didn't Osama bin Laden inherit most of his wealth? And look at what he has done with it. Clearly we should be imposing a world estate tax on terrorist families.

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