Quote:
Originally Posted by kailes2872
I ask this question as only theoretical (as my wife and I were discussing last night)...
For the high net worth folks, I ask this -
If you are covered up to 5 million on inheritance tax, and then everything above 5 million has a death tax rate of approximately 40%, then 12 million becomes 9 million really quickly (2.8 million in taxes above 5 million).
I know that cards and collectibles are assets but it becomes a little more blurry as there is not a hard and fast amount in mutual fund account that has a set tax.
If over the next 30 years, a high grade green Cobb is purchased, along with some Ruth's, Mantles, etc., and that 12 million dollars in the pile is now 9 and the 2.8 million dollar tax bill is now 1.6 million but ownership transfer has been given to the kids over time, does that help? Or is it simply changing the shape of money and in the end money, property, collectibles, whatever are tallied up and the inheritance tax is given based upon that total above 5 million?
I was using this analogy with my wife last night as a real good reason for me to up the ante in my collection in the coming years as a way to keep assets in the family instead of in Washington, but if it doesn't matter, I will need to come in at a different angle.
Thanks!
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Technically everything applies. Many do play with the numbers when it comes to jewelry, art, collectibles and personal belongings.
In theory it would be easy to gift all of these things and pretend you never owned them but if the IRS does an audit on your estate and there is discovery of the gifts they will go against your lifetime exemption and you might face fines for attempting to defraud the government.
I had a client pass away in 2012 with a large estate and they said the IRS got very picky on the jewelry and they had to get real appraisals for it all. If you bought a high profile collectible with traceable funds and have a taxable estate you are exposing yourself to risk but it isn't guaranteed you will be caught.
If a guy like Marshal Fogel for example who has displayed his Mantle were to try and pretend he didn't own it that would be a bad idea.