Avoiding the inheritance tax

Ask "W" about how "The LLC" works...

I think you need to approach it in the other order. Sit down with your dad and ask him who he wants to run the business after him, and what plans has he made to insure that happens? Showing concern for the family business is usually a good way of getting started. If he has plans he will probably tell you things are taken care of and share with you as much as he wants to. If he has no plans then you can suggest he create some, or you can mind your own business if he tells you to.

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Avoiding the inheritance tax


This is a double edged thread.

First:

My dad has a significant amount of property that will be passed on to his children (Land, businesses, investments, etc). What is the best way for him to avoid giving ~50% away to the government at the time of his death? Also, is this a really pressing issue with the expiration of the Bush tax cuts?

Second:

How in the hell am I supposed to talk to my dad about estate planning without seeming like a greedy little shite (IE Minnesota Tiger)?

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put it in a dynastic trust

A lot of what I do involves valuing estates. 100% of rich people do the same thing: transfer everything into an FLP and let us come up with ways to attach a shite ton of discounts on the value of the assets. So that's the answer.

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First off, how much is the inheritance going to be worth to you?

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The farm is worth a lot to me. most of it has been in my family for 6 generations.

The other stuff is pretty something I value at it's monetary value, but much lower than offending my dad.

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Poodlebrain

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Solid advice. I was considering asking him if he wanted to have a sit down with me and his CPA in the same room. Do you think that's too far?



To everyone else, I didn't mean for this to be a dick showing thread. I'm not a millionaire and have never lived like one. I plan on making it on my own, but I am concerned about this for 2 reasons:

1) frick taxes
2) My other siblings aren't as financially gifted as I am and are likely depending more on the money.

I almost never ask my dad for anything, but I know he would give it to me if I asked. I see it in a lot of the people who have rich parents. It's an overcompensation for everyone always expecting you to be snotty and spoiled.

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A lot of what I do involves valuing estates. 100% of rich people do the same thing: transfer everything into an FLP and let us come up with ways to attach a shite ton of discounts on the value of the assets. So that's the answer.

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Bingo

My mom went ahead and pretty much put everything in my name a few years ago to avoid the gov and nursing homes if it comes to that.

If they don't do anything, it is dropping down to $1M in 2013 with everything above being taxed at 55%, and let's be honest, they aren't going to do anything to move it back up. Even if Obama loses, he is able to effect estate taxes for the next 3-4 years (can't remember exact amount).

As far as the "greedy" worry, if your dad thinks it is greedy of you to try to avoid having to pay (say it is $3M in assets) around $1M in taxes, well then there isn't much to help you. I don't think any father would ever want to put that burden on his family.

I would say your best options are trusts or permanent insurance. I won't try to be an expert on all the options you have for trusts, but that is definitely a good thing to look at and worth talking to somebody about. As far as Insurance goes, that can be a very effective way to completely eliminate the estate tax burden that you expect to have. It can be passed down outside of the estate, and can be used to pay off the estate taxes.

I know most of you aren't huge fans of permanent insurance, but if properly designed, it is undeniably one of the best estate planning tools out there.

LINK


Well, you might want to talk to them. Then again, it might not effect anything they are doing.

If nothing happens, its dropping to $1M. They may know that a bill will be passed by then, but with the rate of things, I personally don't see it happening.

I guess I misunderstood what you were saying. I thought you were arguing that it wasn't going to happen at all. Unless your guys know of something going on right now that I don't, it doesn't look like anything is going to happen


Yes, things could change and the gov't passes a new plan, but Obama wants the gifting amount to go down as much as possible. I guess your guys are just a lot more optimistic that a budget is going to be passed between now and then and it could keep the gift rate at $5M, it could drop to $3.5M, or it could drop to $1M anyways. However, why would I plan right now for what something could be, when I know what it is going to be if nothing changes?