Re: AVOID ESTATE TAXES

From: Rich Carreiro <rlcarr@animato.arlington.ma.us>
Subject: Re: AVOID ESTATE TAXES
Date: Sun, 19 Dec 1999 21:31:20 -0500

Next Article (by Subject): RE: Dividends and P/E Ratios Ira Krakow
Previous Article (by Subject): Re: Anyone pay attention to dividends or P/E ratios? "Lester M. Levy MD"
Articles sorted by: [Date] [Author] [Subject]

>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 can't see how it *can* work.  Where's the liability?  What
does the person actually owe?  How is saying "I owe you $1,000,000
when I die" differ from leaving them $1,000,000 in your will?  And
even if creating such an IOU is considered some sort of liability
(in the accounting sense) then giving it to your children without
them giving you something in return means you have given a gift of
a future interest and that'll be subject to the gift tax rules.

You are certainly allowed to reduce your assets by your debts when
figuring the size of your estate.  But where's the debt here?

And then there's the simplest IMHO :-) test of all -- if it were that
easy to get out of paying estate tax:
(1) You'd be reading about it in every popular finance media known
    to man.
(2) There would be far fewer estate tax specialists out there.

Since neither of those are true, I conclude it doesn't work.

Rich Carreiro                            rlcarr@animato.arlington.ma.us

- -

Go to Jeff Salisbury LWGate Home Page.