Posts Tagged ‘inheritance’

Death and taxes?

Monday, December 21st, 2009

As crazy as it may seem, there is actually such a thing as a “death tax,” and it’s exactly what it sounds like: the government does, in a manner of speaking, charge you money for dying. But since you, being deceased, are obviously not in a position to make any payments, it’s your heirs who have to take care of death taxes, also known as inheritance tax and estate tax.

Inheritance tax is the tax you have to pay in exchange for inheriting money in someone’s will; estate tax is the same principle applied to property instead of money. While these taxes are often staggeringly high – they’re currently at up to 45% and expected to grow in the years to come – they only apply to extremely high net worth estates (over $3.5 million as of 2009). Inheritance and estate taxes have long been controversial; their supporters argue that inheritors didn’t earn any of these assets themselves and so should have to surrender a big chunk of them to the government, while detractors say that people work hard to earn money with the expectation that it’ll be there to make their children’s lives easier. Some people attempt to set up complicated networks of trusts in order to avoid these taxes, but it isn’t easy to do so. The Bush administration attempted, unsuccessfully, to phase out inheritance and estate taxes, but for the present it seems that, much like death, they’re simply a fact of life.

It’s important to know, though, that the tax laws surrounding death can vary somewhat from state to state. Make sure to check with your local tax authority before dying.

A Bequest is…

Wednesday, October 14th, 2009

A bequest is a gift of personal property to a person or institution according to someone’s will. For example, you might receive a bequest of money, piece of art, or a whole estate upon the death of a relative.

A Will is…

Monday, August 17th, 2009

A will is a legal document that expresses how a person wants his or her property and assets to be distributed after he or she passes away.

Inheritance is…

Tuesday, August 11th, 2009

Inheritance is the transfer of property, money, or other assets by law upon the death of an individual. For example, if a relative includes you in their will and then passes away, you may inherit money, a home, or maybe a car or some art that belonged to them.

Why can’t you cash in your trust fund as soon as you get it?

Wednesday, July 8th, 2009

The ways in which trusts can be controlled vary widely. Some trusts have an age restriction (for example, you might not get access until you turn 21, or maybe you get half of it at 25 and the other half at 30); others allow you only a set monthly income out of the trust; there are also those that require you to reach a milestone in your life (say marriage or children). In addition, the person or people who set up the trust appoint trustees – people whose job it is to make sure the trust is used according to their wishes. Many trustees have legal permission to deny money to the beneficiary (the person the trust is for) if they have reason to believe he or she will use it inappropriately. All these restrictions can be quite a pain, but when you consider that a trust is basically a gift, the trust’s creator naturally has some say in how that money is used.