Are you a Trust Fund Baby?

[Principessa]

A young acquaintance of a friend, recently revealed she would not be voting for Obama because she would lose over one million dollars from her inheritance if he went through with his proposed increase to the estate tax. Needless to say we were both shocked.

Apparently, my friend and I are the last two people in the Western Hemisphere to not have trust funds. :tongue:

Heck, unless I miss my guess I will be lucky if my parents leave enough money for their burial. The thought of there being anything extra for me to 'play' with has never been part of my reality.

I'm curious about how the rest of you live.

• Are you a 'Trust Fund Baby?'
• How did your family make their money?
• Do you work in the family business?
• Do you work?
• Do you fear running out of money?
• Is your vote in the upcoming election based mainly on the candidates stance on the estate/inheritance tax?

Estate Tax
Barack Obama - Make permanent estate tax with $3.5 million exemption and 45 percent rate.

John McCain - Make permanent estate tax with $5 million exemption and 15 percent rate.

 

[B_JasonDawgxxx]

2 words. Off Shore.

 

[Jovial]

2 words. Off Shore.

1 word. Offshore.

 

[Drifterwood]

Are they proposing to tax the income from the estates at that rate NJ, or the whole estate?

Whilst I have no personal axe to grind, I find inheritance tax iniquitous, simply because tax has already been paid once on that money. Sure, pay tax on the income from it. Seems very anti American Dream to me.

 

[Principessa]

2 words. Off Shore.

Does that mean they made their money in offshore drilling?
Or is the cash stashed in offshore banks?
Do people still hide money in the Cayman Islands and Switzerland or is that just something you see in movies?

Jason dahlink, we all know you are a house boi. Stop trying to front like you are a trust fund baby. :tongue: :lmao:

 

[B_JasonDawgxxx]

Does that mean they made their money in offshore drilling?
Or is the cash stashed in offshore banks?
Do people still hide money in the Cayman Islands and Switzerland or is that just something you see in movies?

Jason dahlink, we all know you are a house boi. Stop trying to front like you are a trust fund baby. :tongue: :lmao:

Yes you got me. Now can we have fresh towels in room 405 dear? lol:biggrin1:

 

[Principessa]

Are they proposing to tax the income from the estates at that rate NJ, or the whole estate?

I believe it is on the whole estate.

Whilst I have no personal axe to grind, I find inheritance tax iniquitous, simply because tax has already been paid once on that money. Sure, pay tax on the income from it. Seems very anti American Dream to me.

Differences Between Estate Taxes and Inheritance Taxes

The primary differences between inheritance tax and estate tax are where the tax burden falls -- that is, whether it must be paid by an individual heir, or by the estate itself -- and to whom the tax is paid.

In the United States, inheritance tax is levied by the state. In recent years, however, many states have repealed or phased out their inheritance taxes.

The U.S. federal government levies the estate tax. However, the Economic Growth and Tax Relief Reconciliation Act of 2001 has been phasing out the estate tax, and is set to repeal it in 2010. Oddly, in 2011 the tax will rise from the dead. The U.S. Congress continues to debate the final fate of the estate tax.

Inheritance tax is a tax on the money and assets received by a beneficiary (also called a transferee or heir) from the estate of the decedent (the person who died). The estate is the grand total of everything the decedent owned and had interests in (business investments, for example) at the time of death. Beneficiaries must pay taxes on the value of whatever they inherit, though they can claim a number of exemptions to reduce these taxes.

The inheritance tax rate depends primarily on the type of property being inherited and the relationship of the heir to the decedent. For example, when Mr. Smith dies, he leaves his mansion and fortune to his children, his fancy car collection to his brother Ralph and his yacht to his old fishing buddy Terrance. Usually, each child must pay taxes on what he or she inherits.

Ralph must pay taxes on the car collection. He will probably be taxed at a higher rate than Mr. Smith's children because he is not a lineal descendant or ancestor -- not a child or parent of the deceased. Non-lineal heirs are generally subject to higher inheritance taxes.

Terrance must pay the most taxes, as he is the most distantly related heir -- just a friend.

Estate tax is a tax on the total value of the money and assets left behind by a decedent. Whereas heirs are responsible for paying inheritance taxes, the estate's executor or administrator (the person responsible for handling the affairs of the estate, as directed in the decedent's will) must pay the estate tax. After various exemptions are applied, the executor uses money from the estate itself to pay the tax.​

The estate tax rate depends on the overall value of the estate. Usually, appraisers assess the fair market value of the estate's assets and interests to come up with the overall value of the estate.

For example, appraisers declare that Mr. Smith's estate is worth $10 million. This is the total of Mr. Smith's checking account, his mansion and land, his car collection, his yacht and his shares of stock. The executor is responsible for paying the federal estate tax on the $10 million value. He or she uses the estate's holdings -- cash, real estate, stocks, trusts, business investments, et cetera -- to pay the tax. This tax is assessed before the heirs receive their inheritances. The federal government gets its money before anyone else.

 

[YourAvgGuy]

Sometimes things are left better unsaid... you know we are being monitored (that's for y'all who are a little paranoid).

To dance around your questions... some of us grew up with meager means while others lived a lush and lavious lifestyle. However, regardless of what our material possessions might be, I think we all have one thing in common... the fear of losing a great deal of money or being taxed significantly, especially those who are middle class and upper middle class. Neither candidate has truly convinced me on how they plan to balance the budget. Personally, I am not terribly happy with either nominee, but I digress...

As far as where people invest their money... yes, offshore accounts is one method of investing. Other options are real estate (risky if you have no clue what you are doing) gold, diamonds or other precious gems and metals (people should really look into this market; I think you would be pleasantly surprised). And, if you are like my grandmother, bury it in a jar behind the house. :smile: She did not trust banks!

Driftwood, you are totally correct. The money has already been taxed at least once and in some cases twice; why they continue to tax it is questionable, but hey... we are in America.

Where are my towels???

 

[B_starinvestor]

there are ways around the estate tax. If married, one can move assets into an irrevokable trust which is viewed as its own tax entity. Individuals can set up an ILIT (Irrevokable Life Insurance Trust) in which life insurance can be purchased to pay the estate tax. Nonetheless, The estate tax is simply a second tax on funds that people take a lifetime to accumulate. But it is difficult to eliminate because people view it as another tax break for the wealthy.

 

[BuddyBoy]

• Are you a 'Trust Fund Baby?'
• How did your family make their money?

I was, but I never saw a dime of it. The old tradition, back when Canada still had inheiritance tax, was for grandparent to leave the money to the grandchildren, since if they left it to their own children it would end up being taxed again in 20 or so years. Skip a generation, pay less tax over time.

However, when the laws changed, my aunt decided to challenge the trust on a technicality. After 15 years in and out of court, she won - and had depleted it of 98% of it's value in legal costs. D'oh!

As to wear it came from, well, the great-greats owned a lot of real estate, large chunks of the island of Montreal, and my grandfather's generation were all lawyers, politicians, senators, judges, and, oddly enough, involved in the auto industry importing and manufacturing Rolls Royces. My brother and father both ended up used car dealers, so family money doesn't buy class.

 

[canuck_pa]

I have a couple of friends that will inherit a great deal of money. In both cases they have to work and make their own living.

One's parents bought her and her husband a house for over $1.5 million and she gets gifts of money now and then but she has to work to make ends meet. She gets paid by managing her family's charitable foundation.

The other friend has always had to make her own money. In fact when she moved to a new city she worked as a maid but then turned it into a profitable business which she then sold. She stands to inherit about $100 million.

There are ways to by-pass some inheritance taxes. One way is to put property in joint ownership and having joint bank accounts.

I can only dream about any inheritance. I do get gifts and money once in a while. I'm hoping my mother spends her last dime just before she kicks-the-bucket.

 

[D_Fiona_Farvel]

This is such a sensitive topic for me.
I lost my father, will be two years in November, and I did have to pay for his funeral. The money was eventually returned when the estate was settled, however, I wasn't prepared to take the financial hit at all.... and this was a military burial, so it wasn't that expensive, in terms of regular funeral costs, either.

• Are you a 'Trust Fund Baby?'

Definitely not.
When my parents die I will be left with a lot of bills, thankfully they both have life insurance. They are by no means wealthy. But my step father has left everything to my mother, she may or may not out live him, but if she does, when she dies his heirs will certainly sue me because I would inherit his foreign estates through my mother. If they don't try to sue her first.

• How did your family make their money?

The paternal side had no significant assets. The maternal side have had significant land holdings in the West and South, gained mostly through 19th century inheritance. But the majority of it was lost in challenging primogeniture and other shenanigans, mostly to legal fees and bad business sense.

• Do you work in the family business?

The family business?
Agriculture was the maternal sides family business, however, my mother's generation were not interested in farming so the tradition wasn't continued. Plus, the 80s, when my grandfather died, were not kind to family farms/ranching.

• Do you work?

Unfortunately. I have held a job since I was twelve.
Would I sit on my ass all day if I could? Yes.

• Do you fear running out of money?

No. I have been poor, I have been comfortable, and never have I felt desperate for money. If worst comes to worst, go to your backup plan... you're inconvenienced, you move on, nothing significant happens... it just looks darker when your in the situation and I speak from experience. :smile:

• Is your vote in the upcoming election based mainly on the candidates stance on the estate/inheritance tax?

No.
However, only one estate that I stood to gain from reached a gross worth of $5 million+ dollars. I recall that after all the court cases had been settled and the family deeply fractured, the heirs received about $50k each.

 

[D_Fiona_Farvel]

2 words. Off Shore.

Curacao? :biggrin1:

 

[whatireallywant]

• Are you a 'Trust Fund Baby?'

I WISH!!!! Nope, I'm from a blue-collar, working-class family.

• How did your family make their money?

They don't have much money. Unfortunately I am now having to ask my family for money once again as I don't have a steady income.

• Do you work in the family business?

My family never owned a business, unless you count their meager earnings from their very small (36 acres) farm. I did a little of the farm work growing up, but my family doesn't really farm anymore due to my parents' health problems.

• Do you work?

When I can, but I haven't had a steady job in three years. I've been living on temp jobs and unemployment benefits, and am constantly looking for a steady, full-time job.

• Do you fear running out of money?

CONSTANTLY!!! But not from a trust fund, since I don't have one.

Is your vote in the upcoming election based mainly on the candidates stance on the estate/inheritance tax?
Nope, not at all. My vote is based on their stance on a variety of issues, from how they will deal with unemployment and job creation/training, to women's rights and the right to choose.

 

[ucsb123]

My parents put about 20K in a college fund which paid for my Ford Focus and some of the fraternity fees. They also paid about half my education (about 35-40k I have to pay). Not rich by any means, but not poor. We are upper middle class. What helped us out was the timing of buying our house. We bought it for less than 93k and before the crash appraised at 430k. Now about 200k (still more than twice the amount paid for). Also parents saved a good deal of money in Saudi Arabia, when we lived there. Free housing, car, utilities, and income was not taxed.

Considering my economic status, the inheritance tax does not affect me. I will be left money and assets when my parents die, but not enormous sums of money. However I can see both sides of the issue. If I worked all my life to provide for my family, why would I give it away to the government? Also, for those in high property value regions...it's easier to get to the 3.5million dollar mark on something so unstable as housing prices. On the other side, we need to remember that concentrated wealth is also bad. Concentrated wealth creates corruption and social inequality. Striving for a nation that is shades of middle class is the most stable. Personally since I'm not in that situation (but a good deal of my friends will be) I don't care.

 

[B_Austin Blue]

There are always easy ways of getting around this. Offshore banking in Jamaica, Caymens, Andorra etc. Or you can put the money into real estate and give your children a house when they are 18 etc. My parents and grand parents put money into real estate and then transferred the assets to my sister and I when we finished college.

 

[Principessa]

ChockoKittie & Whatireallywant, thank you for being the only two, to actually answer my questions.

 

[B_Think_Kink]

I'm not a trust fund baby, but if anything happens to my parents I would be very wealthy and then selling the house and stuff.

 

[BuddyBoy]

However, only one estate that I stood to gain from reached a gross worth of $5 million+ dollars. I recall that after all the court cases had been settled and the family deeply fractured, the heirs received about $50k each.

Deja vu!

 

[BuddyBoy]

Curacao? :biggrin1:

Hey, I used to work for a bank in Curacao! Given the changes going on in banking privacy, especially in the caribbean, I'd recommend somewhere outside of the immediate sphere of influance of North America. Switzerland is always in style. Panama has been holding up vis-a-vis privacy, but I wouldn't count on them forever. Caymen, Antigua so-so. Bahamas, forget it.

<-- Not a rich jet setter, BTW, just a banking software guy.