Broken promise ???

[RetireeRobert]

Why do people's "dislikes" have to be made into law and affect everyone?!? If you don't want to transfer funds, businesses, land, etc to the next generation, than you set-up a will. trust, etc and transfer it as you see fit.



I would rather make my own choices than have the Gov't come in and take what I worked hard to create. If the Gov't wants to create incentives for great giving at death, then let them do it. Confiscation isn't it.


If anyone wants to pay more in taxes they are welcome to do so. Sounds like Gumby will be first up to the plate. Thank your generous donation to the Gov't.



As to the OP, laws change. Roll with the punches. And if Gumby has his way, you won't have to worry about it at all.


cd :O)

Bravo! +1

 

[skyking1]

Who says they don't? You are painting with pretty broad strokes.

Let's say after your Navy days you started a law firm that was run so much differently than "normal" firms. You charge rates that almost anyone can afford and it's resulted in a nice lifestyle for you. Let's say you have two children that went to law school and started working at your firm. Well, you die. Guess what? Firm goes away. Sorry, kids...that's the rules. Figure it out on your now, mmmkay? Seems pretty fair to me, right?

There are many ways to skin the cat.
What I see are the rich elders not wanting to let go of their assets in a timely or even helpful and constructive manner. They want to "leave it all" . Why not start disbursing it while they are alive?
In your example above, that scenario is ripe for an Employee Stock Ownership Plan. (ESOP).
https://www.investopedia.com/terms/e/esop.asp
There is no need to try to dodge taxes and keep the wealth concentrated, nor is there a need to destroy the company that was built up and render a bunch of people unemployed.
DW came *this* close to being a part owner in a family bank, but the elder blinked at a cash out from a medium sized chain. They had the ESOP paperwork rolling too.
Son in law was president and sure, he'll get his money on inheritance, but the family bank is gone. He would have rather shared a bit of it with DW and other friends and keep it as it was, a cool small bank.
It became a charmless featureless branch of a boring bank, and then closed after nearly 100 years at the same location.

 

[MrsHaloFIRE]

I was wondering if I was the only person who thought this way. DM wanted to put her house in my name and I asked that she not. I always felt like it was a tax-dodge (albeit legal). We never did in my name, not sure if she picked another sibling...

Funny, I view the Medicaid planning ("tax dodging") as no different from everyone that carefully nurses, plans and perhaps batches their income (on paper) so they qualify for ACA. Both are trying to comply with a set of income guidelines to ultimately save money (for themselves, their charities of choice or their heirs). We have countless threads on the ACA cliff balancing and thats considered just good planning, but anyone who doesnt want to spend it all on LTC is a pariah. THat's rich.

 

[pb4uski]

I think ACA subsidies and Medicaid LTC planning have some similarities but at the end of the day are significantly different.

Medicaid LTC planning costs taxpayers $50-70k a year.... the $70-90k a year cost of nursing home care less SS foregone (I'm guessing $20k at best).

ACA subsidies for a 60 yo retired couple who manage their income to 400% FPL would be about $17k a year.... big difference... and even with that amount of subsidies that 60 yo couple is still paying almost $6k a year for health insurance.

Also, those who do manage income for ACA subsidies are in many cases just limiting Roth conversions or tax-deferred withdrawals and that deferred income will ultimately be taxed so it is just a timing difference. Assets shifted to irrevocable trusts for the benefit of heirs in Medicaid planning that would have been used to pay the grantor's long term care are often hundreds of thousands that are permanantly beyond the reach of taxpayers.

https://www.kff.org/interactive/sub...1][age]=60&adults[1][tobacco]=0&child-count=0

 

[qwerty3656]

I see a number of references to "another reason to convert to a Roth...". Roth distributions have to begin in 10 years as well don't they? What does converting to a Roth do for you?

 

[RunningBum]

I see a number of references to "another reason to convert to a Roth...". Roth distributions have to begin in 10 years as well don't they? What does converting to a Roth do for you?

Unclear exactly what you are referring to. No IRA distributions "have to begin in 10 years". If you are talking about a Roth you started, it never has to be distributed. If it's an inherited Roth, it has to be fully distributed within 10 years, not begun, same as tIRAs. But that inherited Roth distribution is tax free. So if looking out for your heirs is a priority, Roth converting at the same or lower rate you expect them to be in when they inherited is an advantage.

 

[pb4uski]

I see a number of references to "another reason to convert to a Roth...". Roth distributions have to begin in 10 years as well don't they? What does converting to a Roth do for you?

The 10 years is only for an inherited IRA... so unless the person inhetritig the Roth needs the money they can let it grow for 10 years and then withdraw just before the deadline and the entire withdrawal, including all growth from the time they inherited it until the date they withdraw is 100% tax-free.

If they inherit a tIRA and do the same thing then they owe tax on that 10 years of growth.... that's a pretty signficant benefit.

Let's say my heirs inherit $100k and the $100k doubles to $200k in 10 years and the relevant tax rate is 25%. If they inherit a tIRA after 10 years they walk away with $150k... if they inherit a Roth then they walk away with $200k.

Which would you prefer? $150k or $200k?

 

[TheWizard]

Totally agree.... medicaid LTC planning is one of my top pet peeves.

I don't know much about Medicare LTC planning, since it's a non issue for me.

But...
If some sort of confiscatory estate tax were to become law, guess what would happen.
That's right, enormous transfers of wealth to the younger generations while the matriarch is still alive.

Rich families, in general, didn't get there by being stupid and ignoring tax incentives...

 

[Irishgirlyc58]

Funny, I view the Medicaid planning ("tax dodging") as no different from everyone that carefully nurses, plans and perhaps batches their income (on paper) so they qualify for ACA. Both are trying to comply with a set of income guidelines to ultimately save money (for themselves, their charities of choice or their heirs). We have countless threads on the ACA cliff balancing and thats considered just good planning, but anyone who doesnt want to spend it all on LTC is a pariah. THat's rich.

Agreed! People will justify how they are working the system while judging others who are doing the same.
Rich indeed.

 

[Gumby]

Agreed! People will justify how they are working the system while judging others who are doing the same.
Rich indeed.

As a citizen, I have an interest in seeing that my fellow citizens have affordable health care, because a healthy population helps the nation and helps me as well. So I accept that part of my taxes will help fund the ACA subsidies. However, I have zero interest in paying extra taxes so that my upper middle class fellow citizens can protect their inheritance.

 

[Irishgirlyc58]

As a citizen, I have an interest in seeing that my fellow citizens have affordable health care, because a healthy population helps the nation and helps me as well. So I accept that part of my taxes will help fund the ACA subsidies. However, I have zero interest in paying extra taxes so that my upper middle class fellow citizens can protect their inheritance.

Oh I agree.
But isn’t that what some people are doing by “managing” their portfolios so that their income is low enough for ACA subsidies? Leaving more funds for their potential heirs.
That’s the way I see it.

 

[Gumby]

Oh I agree.
But isn’t that what some people are doing by “managing” their portfolios so that their income is low enough for ACA subsidies? Leaving more funds for their potential heirs.
That’s the way I see it.

Perhaps that or perhaps because they don't have enough assets to live the rest of their lives and still pay for health care, regardless of whether they have heirs. I actually think the ACA is a poor method to deal with the health care issue and have many better ideas, but going further down that path would take the thread further off track and risk having it closed.

P.S.- not that it should matter, but I don't get an ACA subsidy.

 

[youbet]

Comparing managing income to qualify for ACA subsidies with net worth maneuvering at EOL to qualify for Medicaid LTC is comparing apples to oranges.

 

[pb4uski]

Oh I agree.
But isn’t that what some people are doing by “managing” their portfolios so that their income is low enough for ACA subsidies? Leaving more funds for their potential heirs.
That’s the way I see it.

I concede that there are some similarities, but the magnitude is significantly different... see post #54

ACA is tens of thousands... Medicaid LTC planning is often hundreds of thousands.

 

[Surewhitey]

Funny, I view the Medicaid planning ("tax dodging") as no different from everyone that carefully nurses, plans and perhaps batches their income (on paper) so they qualify for ACA. Both are trying to comply with a set of income guidelines to ultimately save money (for themselves, their charities of choice or their heirs). We have countless threads on the ACA cliff balancing and thats considered just good planning, but anyone who doesnt want to spend it all on LTC is a pariah. THat's rich.

I, too, think they are closely related. It still surprises me that ACA doesn't means test like many programs such as food stamps. Wonder why they didn't...

 

[USGrant1962]

I, too, think they are closely related. It still surprises me that ACA doesn't means test like many programs such as food stamps. Wonder why they didn't...

Because they had to tie the mandate to the income tax system to make it remotely constitutional. They did so by making subsidy and enforcement part of the income tax code.

Unlike certain means-tested programs, ACA subsidies are not an entitlement. They are not money that the government pays you if you meet certain conditions. They are tax provisions where the government lets you keep some of your own money when you buy a government-mandated product.

 

[Gumby]

The thread is closed. Posts were deleted. Generalized ranting about taxes is unacceptable.