Re: AVOID ESTATE TAXES

From: "L. Chen" <am302@freenet.buffalo.edu>
Subject: Re: AVOID ESTATE TAXES
Date: Mon, 20 Dec 1999 02:46:19 -0500 (EST)

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> Date: Sat, 18 Dec 1999 12:08:43 -0500
> From: BOB FORD <BOB_FORD@compuserve.com>
> Subject: AVOID ESTATE TAXES
> 
> I recently read an article on avoiding
> estate taxes.  It suggested creating a
> note (IOU)  to your children as a way
> to avoid estate taxes.  For example
> if your estate was $1,000,000 it said
> that you could create a note to your
> children that was payable on your
> death.  If you had two children the
> note could be for $500,000. It is claimed
> that would make the value of your
> estate Zero.

I don't think you can simply give your children an IOU in return for nothing.
To be a valid IOU, you need to receive something of equal value.  Otherwise,
one can argue that you give away an asset worth $1 million and incur a gift
tax.

Also, if there is no interest on the IOU, the value of the interest would be
considered a gift -- esp. whether it is between relatives.

I am not a tax professional; and the above may not be precisely correct.  But
you get the idea.


Chen



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