Asked 3/22/2010
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My home is worth about $4,000,000 When I die if I leace it to my kids will they be subjected to 55% death tax on $3,000,000? I understand that in 2011 the death tax will change to 55% over $1MM. If I have a house worth $4MM this would seem to mean that my kids would have to come up with $1,650,000 in cash within 9 months or be forced to sell my house. Forcing a quick sale of a house this expensive would also lead to selling at a reduced cost. What remedy is available assuming a life insurance policy is cost prohibitive? |
Answer 2/5 - Submitted 3/22/2010
Answer 3/5 - Submitted 3/22/2010
At the moment (and subject to change, probably for the worse), I believe your interpretation of the inheritance tax to be correct.
Life insurance in the amount of the tax is one option, another would be for you to create a trust with that amount of cash in it, which would avoid the delays of probate. Don't have enough information about you to make any other suggestions; a good estate planner would work with you.
Answer 4/5 - Submitted 3/23/2010
I don't have that kind of cash. All I have to leave is the house. Sounds like selling the house before I die and escaping the US may be my best option. At least under Bush I only needed $45,000 not $1,650,000. All I can say is it's robbery. I paid taxes when I made the money. I paid taxes on all the materials I bought to build the house. Now taxes when I want to leave it to my kids. That's triple taxation. A life policy for $1.65MM at my age would cost over $100,000/year!
Answer 5/5 - Submitted 3/23/2010
Can't blame the current administration for this one, it's a leftover from a 10-year plan. It's a default position, left hanging there by the Congress of the time, with the idea that the current Congress could modify it to suit current needs.
If you're thinking of selling, consider doing an owner finance. That would give you some control over your tax consequences -- talk to an accountant.
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