Unaccredited Degrees Are Legal

Rich, this is obviously out of your league. It tends to show that you are not one who resists commenting when you don't know what you are talking about.

IRAs and 401k are taxed without estate taxes and they are taxed at ordinary income tax rates. What eliminating estate taxes does is to avoid double taxation on these assets. That is fair to all citizens.

 

Actually, it does Nosborne. The dynasty trust is not subject to GSTT tax because of the way it is structured. The trust stays intact generation after generation and pays out to the successive generations.

I appreciate your disclaimer before you commented. At least you admitted this is not your area of expertise. You might look into it if you ever have a HNW client who wishes to pass on assets to their heirs.

 

Ahh, another ad hominem from the anonymous troll. Couldn't you just make your point?

Arguing with you is just feeding the troll.

 

Not ad hominem as he did address the subject.

Was it russ who began the name calling?

 

No, you're wrong. Instead of just making his point, he led off with an insulting remark. That is an ad hominem.

 

russ,

I am having a very hard time believing that the trust you describe avoids taxation at all points. Give me a rule number or case cite, please.

Here's why: If the trust you describe is designed to benefit the heirs of the testator, then it is not a non profit trust. The initial transfer of wealth to the trust should therefore be subject to gift tax, if the transfer is inter vivos, or the estate tax if after death. The gift tax is closely integrated with the federal estate tax. Indeed, the two are expressions of the same tax.

The sole way to avoid this inital estate/gift tax, other than to time it with the temporary changes in tax law, would be to make annual contributions in an amount small emough to not be subject to the tax and that likely wouldn't be enough to shelter the vast wealth I think you are describing. And if that was what you wanted to do, you wouldn't need all this machinery to do it.

Now, once the money is in the trust, the trust would have to pay state and federal income tax on its income, or the beneficiaries will have to claim it on their income, depending on how the trust is structured. The corpus WOULD move along, as far as I know, for a while BUT it really couldn't go beyond "a life in being plus twenty-one years" as far as new beneficiaries are concerned because that would violate the Rule Against Perpetuities.

Understand please that I am analysing from "first principles" and not from any professional knowledge of estate/gift taxes. I would therefore be grateful for the citations I requested above.

 

Hi Nosborne,

First of all, the state of Delaware (as have several other states) has eliminated the Rule Against Perpetuities. It no longer applies and therefore there is no "life in being plus 21 years" limitation. This allows the corpus to "move along" as you say indefinitely.

You are right that the trust or beneficiaries will pay the tax (income tax - not estate tax) on any income and gains kept in the trust or distributed to the beneficiaries. There is no GSTT tax paid since the corpus is staying in trust.

I hope this helps!