General Discussion

mainer

(12,557 posts)

41. Here's the rebuttal to your "solution"

Reply to Turbineguy (Reply #26)

Tue Mar 25, 2014, 11:36 AM

Mar 2014

Last edited Tue Mar 25, 2014, 12:09 PM - Edit history (1)

http://www.bankrate.com/finance/taxes/taxes-on-insurance-benefits.aspx

Life insurance

Federal estate taxes must be paid on life insurance benefits above $5.25 million in 2013, but only if the policy was owned by the deceased individual, says Tignanelli.

"If a life insurance policy is owned by the beneficiaries, they won't have to pay an estate tax," he says.

So have your beneficiaries pay the premiums and own the policy. They'll get a tax-free payout. But this solution is not free, and as the insured person gets older, it certainly isn't cheap.

I'm 60 and healthy, and the premium quoted for my term life insurance suddenly shot up to #23,000 this year. I cancelled it.

To get that payout, your beneficiaries would have to pay premiums year after year during your lifetime. If a term policy costs $23,000 a year at age 60 (the number quoted to me), and the parent lives till 80, your heirs would be paying $500,000 over 20 years in premiums -- for what amounts to about a million dollar payout. They'd be better off investing that money in something on their own.

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Highlight:

On the Estate Tax [View all] Fantastic Anarchist Mar 2014 OP

Its a Millionaire's Tax Stallion Mar 2014 #1

Yep, so even less of the total population. ;) Fantastic Anarchist Mar 2014 #2

Time to set up a trust. badtoworse Mar 2014 #3

That gets your estate away from probate Warpy Mar 2014 #5

Sounds like a trust is the way to go badtoworse Mar 2014 #7

Well, you're dead, you're paying no taxes Warpy Mar 2014 #10

I understand all that. badtoworse Mar 2014 #12

If they use infrustracture ... Fantastic Anarchist Mar 2014 #14

They're already paying their own taxes, so they're covering their share. badtoworse Mar 2014 #16

and when your money becomes their (unearned) money whatthehey Mar 2014 #18

Excellent point! A HERETIC I AM Mar 2014 #20

Earned income is one thing, estate tax is a different matter. badtoworse Mar 2014 #22

Are you planning on passing 5.25 million to your heirs? Fantastic Anarchist Mar 2014 #30

My heirs should be well taken care of. badtoworse Mar 2014 #32

And that you don't want to give back to society which made it possible for you ... Fantastic Anarchist Mar 2014 #45

I give back plenty already. There is a point at which you've given back enough. badtoworse Mar 2014 #50

And your heirs need to give back enough too, especially enough of unearned income. whatthehey Mar 2014 #53

I pay at least a couple of families worth in income tax and have for quite a while. badtoworse Mar 2014 #56

Financial sevices are a leech PowerToThePeople Mar 2014 #54

I think those same standards call for civil discourse. badtoworse Mar 2014 #57

No insults at all. Just truth. n/t PowerToThePeople Mar 2014 #59

Yes earned income is one thing. UNearned is indeed another whatthehey Mar 2014 #52

I oppose estate taxes on principle. badtoworse Mar 2014 #55

All right; we have your vote gratuitous Mar 2014 #15

Rest assured, whatever they pay will be the minimum possible. badtoworse Mar 2014 #17

Amen MO_Moderate Mar 2014 #43

They won't pay anything unless it's over 5.25 million dollars. Fantastic Anarchist Mar 2014 #46

but you have NOT already been taxed on it hfojvt Mar 2014 #37

I don't have a problem with capital gains tax badtoworse Mar 2014 #38

but the capital gain is NOT taxed hfojvt Mar 2014 #39

Let him inherit the basis. badtoworse Mar 2014 #40

And some of the deceased property has never been taxed... IphengeniaBlumgarten Mar 2014 #25

Well, it is if it goes over the total untaxed dollar amount Warpy Mar 2014 #28

OK, agreed IphengeniaBlumgarten Mar 2014 #29

OK, we have a trust. It doesn't really protect heirs from taxes. mainer Mar 2014 #24

The really wealthy launder their money to their offspring House of Roberts Mar 2014 #4

Do you have any examples of this? A HERETIC I AM Mar 2014 #21

A lot of people whose estate would be subject to pipoman Mar 2014 #31

If the life insurance premiums were paid by the deceased mainer Mar 2014 #33

As i remember there was a minimum estate value before it made sense. . pipoman Mar 2014 #44

It's 14K per year per child now. Gormy Cuss Mar 2014 #48

Right, I'm behind a year! mainer Mar 2014 #49

First of all, money gets taxed multiple times SheilaT Mar 2014 #6

I do not know why Republicans are against estate taxes PowerToThePeople Mar 2014 #8

My argument is simpler: I don't care if Paris Hilton inherits enough money to live in splendor .... Scuba Mar 2014 #9

Absolutely. After the last 40 years of governments hostile to working people Warpy Mar 2014 #11

This tax only affects the larger estates Gothmog Mar 2014 #13

It's easier than that. Money isn't taxed. People are taxed. eallen Mar 2014 #19

Not to mention, it's not the governments responsibility to set up dynasties TexasBushwhacker Mar 2014 #23

You buy insurance for that tax. Turbineguy Mar 2014 #26

As I mentioned above, life insurance payouts are part of the estate mainer Mar 2014 #36

Here's the rebuttal to your "solution" mainer Mar 2014 #41

My idea was based on not dumping a business or farm in order to pay taxes. Turbineguy Mar 2014 #42

They should just change the rules of baseball, football, and basketball. gulliver Mar 2014 #27

I wasn't aware that Bill Gates had paid income tax on his 50 billion already. n2doc Mar 2014 #34

Excellent post, thanks for sharing this! JNelson6563 Mar 2014 #35

You bet! Fantastic Anarchist Mar 2014 #47

Money hidden on various foreign islands/countries hasn't been taxed. Frustratedlady Mar 2014 #51

I was reading the OP... Bigmack Mar 2014 #58

Yes, unfortunately, that is part of the problem. Fantastic Anarchist Apr 2014 #60