state of the union address

[knabe]

inefficient to who, the government or the maker of the trust and the entity of the trust?  i like where this is going, great topic.

 

[shorthorns r us]

Why are trust income tax inefficient?

Trust are really good at distributing income to beneficiaries.  generally, when income is distributed, it is taxed to the beneficiary just like any of their other income.  the problem with trusts is when income is not distributed.  the income of trusts and estates are taxed at the same rates as any other individual taxpayer, from 10-35% like the table that i posted yesterday; but the brackets are dramatically compressed.  the 35% bracket begins at 10,450.  at taxable income of $10,450, it would still be in the 10% bracket if MFJ or just 15% if single.  keep in mind that these are generalities and there exist exceptions for special circumstances, which i could type 50 pages about.

inefficient to who, the government or the maker of the trust and the entity of the trust?  i like where this is going, great topic.

we all know that nothing is efficient in the hands of government.

 

[knabe]

so could one make a trust to disperse a gift every year till dispersed "tax free", and do this on real estate?

ha, there must be tons of ways to not allow this.

 

[shorthorns r us]

so could one make a trust to disperse a gift every year till dispersed "tax free", and do this on real estate?

ha, there must be tons of ways to not allow this.

are you talking about a gift to a family member or a contribution to a craritable organization?  those are two distinctively different animals.  is the grantor, person funding trust, still alive and expected to remain as such?  what exactly is the realty?  how is is being used and by whom?  state law must also be considerred?. sometimes how badly you want to do it matters.

this is getting dangerously close to me breaking the law.  i would like to keep my lisence; we'll end the specifics on this for now.

 

[knabe]

duly noted

persons are alive.  we are getting dangerously close to an estate that will be taxed at 50% and want to distribute it a little as land was homesteaded, never changed family hands, and is kind of annoying in one respect to manage.  too many other assets will force sale to cover taxes.  i think the limit now is 2.5 million for the "death tax" before you get taxed at 50%.

in fact, one of the properties i am looking to purchase is just such an animal.  a forced sale to cover taxes.

 

[Jill]

The 80 acres across from us just sold that way, they sold for 1/2 what the value of the ground should have been just to cover inheritance taxes.

 

[knabe]

i'm betting they didn't get a prominent seat and camera time at the state of the union address either.

wrong victim, wrong crowd, wrong assets.