"if it goes to the kids or wherever"
Ah, but it doesn't; it goes to "the estate". Then the estate gives it to the kids.
Taxes were paid on money earned by the previously alive person by him. His money gets passed to the "Estate of previously alive person.", untaxed. The estate gets taxed on its gain, since, the day before dead guy died, it had no money, and the day after he died, it had a lot.
In my case, the estate wasn't large enuf to be taxed, but, when my Ma died, the house they bought for $42,500 sold for $2 Mil, and that was all previously untaxed cap gains. Her own income taxes were filed based on her income for Jan, just like they were for '09.
I don't think her four kids would have bitched if the pre-Shrub rates were still in effect. I think it was 2 mil even then, so it wouldn't have been taxed. It's a lot of money. We could have afforded to let the government take some.
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