Gary Cohn, a White House advisor on tax-planning, uttered these words to a group of senate Democrats recently. To Cohn, his comment underscored the fact that very few of the uber wealthy pay estate taxes anyway so eliminating the tax would do very little to the revenue side of the government’s ledger.
But Mr. Cohn has a point here. Only 1 out 500 Americans are affected by the tax and those that are usually use a myriad of IRS allowed techniques to eliminate the tax all together. Some of these strategies are the following:
Using the Annual Exclusion(now $14,000 per person) to gift monies and/or assets out of their estates.
Using the Annual Exclusion with the discounting of partnership interests to gift those interests out of their estate.
Using life insurance in an irrevocable trust to pay an estate tax.
Funding 529 Plans to fund their children’s or grandchildren’s college educations.
Using Generation Skipping and Dynasty Trusts to use exemption amounts to pay little or no estate tax.
Funding Charitable Trusts to transfer appreciating assets out of their estates and in return receive an income stream.
By no means is this an exhaustive list of ways to pay little or no estate tax. There are many other ways that lawyers and tax accountants have conceived of zeroing out a taxable estate.
Robertson Williams of the Tax Policy Center said that the estate tax was designed to prevent the growth of large dynasties in this country and to reduce inequalities. He went on to say that many wealthy families still do pay the estate tax because ” It is reasonable to pay it”. (as quoted in www.cnbc.com/2017/08/17). Reasonable or not reasonable not many are paying it.
William S. Wilson and his firm Wilson and Wilson Estate Planning and Elder Law, LLC. can be reached at firstname.lastname@example.org or at 708-482-7090