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by daveguy 3708 days ago
In the US, you can give your property to whomever you like... and they have to pay taxes on it as income.

I'm not sure why your children should be exempt from paying taxes on the gift of an estate. Call it "death tax" if you want, but really the lack of an estate tax is tax break privilege for the wealthy. The estate tax is simply a decision of what the income tax will be on income in the form of an gifted estate.
2 comments
maxerickson 3708 days ago
The giver is generally on the hook for gift taxes and it is calculated similarly to the estate tax.

That the giver pays is not really a super important distinction, the money is coming from the same place either way, but procedurally it's the giver that has to do the paperwork.

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themartorana 3708 days ago
Except the estate tax is often a much, much larger percentage than normal income tax.
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daveguy 3708 days ago
That is typically not true in the US (2015). In the US there is an exemption on estate tax up to $5.43 Million and the transferred wealth above that amount is 40%. Compared to the highest regular income tax bracket is 39.6% and that is on the income above $464,850. So, it is essentially an income tax on the transfer -- except typically much much less. For example, an estate of $5.44 Million would be $4,000 (on the excess $10,000). Or an effective tax rate of 0.074% not 74% or 7.4% but 0.074%.

Edit: So, yes, if you are transferring 500 Million or 50 Million then you will get close to the 40% tax (slightly higher than the regular 39.6% tax), but if you are transferring 5 Million or below there will be no tax.

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