Re: how to compare living standards

On Mon, 17 Apr 2006 14:23:36 -0500, "Jim Blair" <jeb@xxxxxxxx> wrote:

"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
news:30i74292lt5r7eivpja2muu2p18bhmhh5o@xxxxxxxxxx
On Mon, 17 Apr 2006 11:35:57 -0500, "Jim Blair" <jeb@xxxxxxxx> wrote:

"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message

Trustee and trustor are usually the same people, but the beneficiary
is never the same as the trustee. Typically the beneficiaries of
living trust are the children of the trustee/trustor.

Sorry for the sloppy way I said that. The money passed from parents to
children to grand children, bypassing both probate and Uncle Sam.
Individuals were variously trustees or beneficaries but not both at the
same
time.

The trust avoids probate but does not the Federal estate tax if the
value of the estate exceeds the exemption limit.

Hi,

Do you agree with the figures cited earlier? Over $200 billion passed from
parents to their offspring each year but only about $25 collected in estate
taxes?

If so, what is the explanation for the low effective tax rate?

If not, which of the figures is incorrect?

The amount of estate and gift tax collected in 2005 was $24.7 billion
according to http://www.fms.treas.gov/fr/05frusg/05stmt.pdf. So your
figure on revenue is correct. I don't think anyone knows how much is
passed from parents to their offspring at time of death. Any figure
is a rough estimate at best. Remember, no filing is required on
estates whose value falls below the exemption limit.

The gift tax exemption in 2005 was $1.5 million. Thus if both parents
died in 2005, there would be no tax on an estate worth $3.0 million or
less. But if the estate were worth $5.0 million, for example, the tax
would be $555,800, or about 11.1% of its total value.

The lowest marginal rate on the unified estate and gift tax is 18% on
the first $10,000 above the exemption limit. The highest marginal
rate is 47% on the amount exceeding $2 million. The tax on an estate
worth $100 million would be $46.4 million, but I suspect few actually
pay that large a tax because of the various options available such as
prior provisions for foundations, charitable gifts, etc.

What does all this mean? The total estate and gift tax collected
obviously depends on the distribution of all estate values. The total
value of estates in the region of $5 million very likely exceeds that
of estates in the $100 million region. A lot of estates valued in the
vicinity of the exemption limit can explain why there would be a low
average tax rate.
.

Relevant Pages

  • WSJ: Obama Plans to Keep Estate Tax
    ... Obama Plans to Keep Estate Tax ... Democrats Want to Freeze Levy at Current Levels Instead of Letting It ...
    (misc.taxes)
  • Estate of DAmbrosio v. Commissioner, 101 F.3d 309 (3d Cir. 1996)
    ... ESTATE OF ROSE D'AMBROSIO, Deceased, VITA D'AMBROSIO, Executrix, Appellant ... ON APPEAL FROM THE UNITED STATES TAX COURT ... even though the decedent had sold her remainder ...
    (misc.taxes)
  • Re: how to compare living standards
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  • All About Death & Taxes Beyond Estate Taxes
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  • Re: Re: Re: Death tax gasps
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