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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: redfish who wrote (33465)	3/8/2004 4:52:47 PM
From: aladin	Respond to of 793656

Redfish, Apparently you never heard of the generation-skipping tax. This is simply vehicle to prevent someone from leaving money to a grandchild while its parent is still living (and attempt avoiding estate tax). It has also been used 'eyes open' to put money away for grandchildren - so its not double taxed (part of grandparents estate and parents). But what if I put my money elsewhere before I pass on? Answer - its not available to tax - an estate is established to be what is directly owned at the time of death. A Family Limited Partnership or Foundation is a good way to avoid tax. Typically, you would place private business assets or real estate holdings in the foundation—paying careful attention to the potential gift tax consequences of the contribution. As general partner, you retain control of the assets, while you make gifts of limited partnership interests to children and grandchildren so that they gain an ownership interest. The result: you have reduced your taxable estate without surrendering control of the assets or business. Because assets are usually not marketable and the limited partners exercise little control, assets can often be valued at a discount, maximizing the share of a business that can be contributed free of gift taxes. There is no need to just give away the money and control as you described and these legal entities can be set up for a few thousand dollars - peanuts compared to the tax liabilities due on a medium sized family business. Unfortunately, few partake of these and their estates get ravaged at death. The really rich create family trusts, think Getty, Ford or Heinz. To see these in action with the upper echelon in the tech industry - look at the insider sales with the top tech firms - lots of Family Trusts & Foundations. Tons of money to be made by lawyers advising the newly rich on how to keep it :-) However, if you or anyone you know is not a US citizen, but live here, it is really important to look into these issues. The IRS assumes a surviving non-citizen who inherits money or property will leave - so they seize assets equivalent to the maximum tax liability immediately. A good estate plan can avoid that. John