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

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

Jan 7 2014, 4:30am CST | by

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...

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29 weeks ago

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

Jan 7 2014, 4:30am CST | by

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 Wood@WoodLLP.com . 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

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told toda ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dew ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states la ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mu ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an a ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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