Downton Abbey Smashes Ratings Record, Now Let's Tax It

Jan 7 2014, 4:30am CST | by

Downton Abbey Smashes Ratings Record, Now Let's Tax It
Photo Credit: Forbes Business

Downton Abbey is back and the Season 4 premiere drew a record audience. That is good for fans and good for PBS. But all the friction over how to pay duties on Mathew Crawley’s death isn’t good. Yanks call it estate tax but in any language, it hurts. In England, death duties date to 1894 and still figure in the U.K. budget.

Stateside, our IRS has collected tax on the transfer of property at death since 1916. Although the tax has been amended many times, one brief episode when it didn’t apply at all was in 2010. But despite that one strange year, it’s clear that the estate tax and the corollary gift tax imposed on transfers during life are not going away.

As the Season 4 opener portrays, with great estates like Downton in the U.K., it was not uncommon for property to be sold to pay the tax. Witness the friction between icy Mary Crawley and her father Lord Grantham over whether to sell off portions of Downton! And the discovery of Mathew Crawley’s letter cum will thickens the plot.

In England or the U.S. today, planning can often avoid estate taxes, even where estates exceed the free allowances. On that point, Americans have it lucky. Under current U.K. rules, if the first spouse to die leaves everything to the survivor, the tax-free allowance is £650,000.

The value over and above £650,000 is taxed at 40%. For unmarried individuals, the tax-free allowance is only £325,000. Current U.S. tax law is considerably more generous. For 2014, you can transfer $5.34 million tax-free.

If you are married, your limit is double that. And if you are just giving assets to your spouse, the amount is unlimited, as long as the inheriting spouse is a U.S. citizen. In total, that means a married couple can transfer $10.68 million to anyone tax-free! Even if the estate is much larger than that, there should be no tax at all until the second to die.

U.S. estate tax law has been mercurial, and for years that made planning tough. Indeed, a change in 2001 steadily increased the tax-free amount until the end of 2009. Then, due to a squabbling Congress, there was no estate tax at all in 2010. That was a good year to die, as a few billionaires cleverly proved. Then in 2011, the tax came back but exemption amounts were scheduled to expire at the end of 2012.

Surprisingly, though, over New Year’s 2013, Congress made the $5 million per person figure permanent, even indexing it for inflation and adding other favorable rules. Still, so many people rushed to make year-end gifts in 2012 that some people–particularly if they made large outright gifts to kids or grandkids–later tried to unwind gifts.

But suppose Downton were in the U.S. and worth much more, say $20 million or $50 million? U.S. farmers and small-business owners may worry that their loved ones may have to sell their family farm or business to pay taxes. However, there are several rules that can help.

First, in some cases special valuation rules can lower the value used. Moreover, once you settle on the estate tax figure, there are ways of stretching the payment of taxes out for 10 or even 15 years in some cases.  There are various hurdles to be met to take advantage of such rules. However, if you play your cards right, it usually shouldn’t be necessary to sell a family business or family farm to pay estate taxes.

Still, it would be nice not to have them at all, wouldn’t it?

You can reach me at This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

Source: Forbes Business


Don't miss ...


<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.


blog comments powered by Disqus

Latest stories

WhatsApp behind half of Italian divorce cases: Attorney group
Rome, Nov 20 (IANS) Almost half of the divorce cases in Italy rely at least in part on information gathered through the instant messaging service WhatsApp, according to the Italian Association of Matrimonial Lawyers.
Modi among contenders for Time's Person of the Year
New York, Nov 20 (IANS) Indian Prime Minister Narendra Modi is in the list of 50 contenders for Time magazine's Person of the Year.
Atomic clock that fits in your pocket
Washington, Nov 20 (IANS) Researchers, including an Indian-origin scientist, are working on a highly accurate atomic clock the size of a Rubik's cube, measuring about 2 inches in each dimension.
New insight into cells may lead to better drugs
London, Nov 20 (IANS) In a significant revelation that may help scientists create better drugs, a team of British researchers have found how different types of immune cells communicate with each other and how they kill cancerous or infected cells.

Latest from the Network

Lily Allen's record label closed?
Los Angeles, Nov 21 (IANS) Singer Lily Allen's record label ITNO has reportedly been closed after three years. Allen set up the label ITNO, which stands for "In The Name Of", in 2011 with Sony, but has since been...
Read more on Celebrity Balla
Drone attack in Pakistan kills five suspected militants
Islamabad, Nov 21 (IANS) At least five suspected militants, including what sources claim to be a high value target, were killed in a US drone attack in Pakistan's North Waziristan region Thursday, media reported....
Read more on Politics Balla
Mike Nichols, director of 'The Graduate', dies at 83
Washington, Nov 20 (IANS/EFE) Mike Nichols, whose 1967 film "The Graduate" earned him an Oscar as best director, has died, media reported Thursday. He was 83. "He was a true visionary, winning the highest honors in...
Read more on Celebrity Balla
Myanmar military launches counter-attack against armed group
Yangon, Nov 20 (IANS) The Myanmar government said Thursday that its troops had launched a counter-attack on the ethnic Kachin Independence Army (KIA) after the armed group disrupted their normal movement. The...
Read more on Politics Balla
Iraqi forces retake town from IS
Baghdad, Nov 20 (IANS) Iraqi security forces Thursday retook control of a town from Islamic State (IS) militant group in eastern Iraq, and are fighting to seize another in the west, security sources said. In Iraq's...
Read more on Politics Balla
Turkey to cooperate with Iraq in fighting IS: Iraqi PM
Baghdad, Nov 20 (IANS) Iraqi Prime Minister Haider al-Abadi said Thursday that Turkey has offered military cooperation to fight the Islamic State(IS) militant group. "There is an agreement on information exchange and...
Read more on Politics Balla
Hostilities, human rights violations continue in Ukraine: OHCHR
Geneva, Nov 20 (IANS) Hostilities, human rights violations and abuses continued in eastern Ukraine despite the announcement of the Sep 5 ceasefire, a report released by the Office of the UN High Commissioner for Human...
Read more on Politics Balla
Carrie Underwood learned baby news at dinner
Carrie Underwood learned she was expecting a baby boy while having dinner with her husband. The 'Something In the Water' singer and spouse Mike Fisher are expecting their first child together but felt the sonographer's...
Read more on Celebrity Balla
Keira Knightley's fan fear
Keira Knightley finds Benedict Cumberbatch's fans terrifying. The 29-year-old actress insists her 'Imitation Game' co-star's devoted female followers - who are dubbed 'The Cumberbitches' - are ''lovely'' but she finds...
Read more on Celebrity Balla
Sheryl Crow selling boots for charity
Sheryl Crow is selling her cowboy boots for charity. The 'Soak Up The Sun' hitmaker has decided to offload the clothes, shoes and accessories she no longer wears on eBay's Charity Shop to raise money for the Feeding...
Read more on Celebrity Balla