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Beneficiaries still have to pay an inheritance tax. The loophole is putting all your assets into a trust and declaring beneficiaries of the trust. When you die

Beneficiaries still have to pay an inheritance tax. The loophole is putting all your assets into a trust and declaring beneficiaries of the trust. When you die the beneficiaries only have to pay capital gains from value at the time the trust was _created_. IE the closer to death the trust was created the less tax they pay. There is slow moving efforts to remove this loophole.

Retric 3y ago
Critically, in years when estate taxes existed they treated cash identically to stocks so it was still a loophole. 13 million in appreciated assets counts the same as 13 million in cash. You only pay estate tax on the 80k over the $12.92 million threshold even their capital gains would have been 1.5 million that goes away. If you inherit an asset your tax basis is its value when the owner died. This may be significantly less than what it is when you actually receive the asset, but it’s likely higher than when that person originally purchased it. PS: Estates may chose an alternate date 6 months after someone died, which again generally helps.
throw0101a 3y ago
> Beneficiaries still have to pay an inheritance tax. Only on amounts above US$ 12.9M (federally), but there is no tax if the estate passes to the spouse: * https://www.investopedia.com/estate-tax-exemption-2021-definition-5114715 https://www.investopedia.com/estate-tax-exemption-2021-defin... * https://www.investopedia.com/terms/i/inheritancetax.asp https://www.investopedia.com/terms/i/inheritancetax.asp How many estates are above that? In 2021, "only 2,584 estates paid a positive federal estate tax." * https://en.wikipedia.org/wiki/Estate_tax_in_the_United_States https://en.wikipedia.org/wiki/Estate_tax_in_the_United_State... * https://www.irs.gov/statistics/soi-tax-stats-estate-tax-filing-year-tables https://www.irs.gov/statistics/soi-tax-stats-estate-tax-fili...

Retric 3y ago

Critically, in years when estate taxes existed they treated cash identically to stocks so it was still a loophole. 13 million in appreciated assets counts the same as 13 million in cash. You only pay estate tax on the 80k over the $12.92 million threshold even their capital gains would have been 1.5 million that goes away. If you inherit an asset your tax basis is its value when the owner died. This may be significantly less than what it is when you actually receive the asset, but it’s likely higher than when that person originally purchased it. PS: Estates may chose an alternate date 6 months after someone died, which again generally helps.

throw0101a 3y ago

> Beneficiaries still have to pay an inheritance tax. Only on amounts above US$ 12.9M (federally), but there is no tax if the estate passes to the spouse: * https://www.investopedia.com/estate-tax-exemption-2021-definition-5114715 https://www.investopedia.com/estate-tax-exemption-2021-defin... * https://www.investopedia.com/terms/i/inheritancetax.asp https://www.investopedia.com/terms/i/inheritancetax.asp How many estates are above that? In 2021, "only 2,584 estates paid a positive federal estate tax." * https://en.wikipedia.org/wiki/Estate_tax_in_the_United_States https://en.wikipedia.org/wiki/Estate_tax_in_the_United_State... * https://www.irs.gov/statistics/soi-tax-stats-estate-tax-filing-year-tables https://www.irs.gov/statistics/soi-tax-stats-estate-tax-fili...