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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MJ who wrote (12924)	8/22/2003 12:42:28 PM
From: Drygulch Dan	Read Replies (2) \| Respond to of 306849

MJ - Thanks for the lead... This is for those others, they know who they are, the socialists and the tax ignorant... Taxation 102: or How CA will eventually pay off its 38 Bills The Great State of Calif has seen fit to remove from its books all Estate Tax laws save one. In its wisdom, Calif rides the Federal coattails and takes a percentage of all resident Death Taxes. For extra credit Read your Fed 706 Form instructions. If you own a CA fixer upper and a rental condo unit or two this will apply to you. When you die, your heirs owe the gov't nothing unless your Estate exceeds $1 million. In CA this is not a big number. Let's say Lizzy here grows old and dies, she owns maybe a couple of houses by then, and some rental property and some stocks. A bit of cash and she's buying some bonds in her elder years. Net worth at death? I'd guess $3.5 million easy. Probably a lot more, from the way she talks. Guess who has their hands in her cookie jar? Per the 706, which is due 9 months to the day after she died, her heirs will be writing two checks. One to the IRS and one to FTB. They'll total about $1.5 million. Where will that money come from? Lizzy's heirs will have a garage sale and sell all of Lizzy's momentos, then they'll sell the stocks and the bonds, then they'll probably have to sell the garage and the house that's attached to it. Eventually, they'll scrape it together and split the "residue". For its part CA will receive about $250K. Its a nice income. You can count on people dying. Eventually everybody does it. The thing is these numbers are not absolutes. There is a sliding scale. Basically it approaches 49% taxation. If Lizzy is only worth $3.5 mill, her heirs should consider they got off easy. The tax increases dramatically as the net worth scales up. You work all your life, you pay all these taxes as you go, you accumulate some stuff and in the end, the gov't says gimme half of it, first. Funny thing, the tax and spend ilk think this is just hunky dory. Getting back to that horrible $38B debt overhang...We just need 152,000 Lizzies to die and the state will pocket enough to fund its debt. In this state of 30+ million people that's only .5% We'll get there. PS: Trusts don't do squat to avoid this. They just help to avoid lawyers fees and court probate related costs.