Beat the Inheritance Death Tax

These three things are certain: You live. You die. You pay taxes.

The only question is how much of what you own are you going to allow the Government to take from your family once you are gone? Wouldn’t you prefer the legacy of what you build to be put back in your family’s hands or perhaps charitably donated to your favorite causes instead?

The primary tax culprits that have reared their ugly heads to devastate estates and prevent this from happening throughout history are death taxes. Death taxes have left an indelible mark on the history of civilization. The ancient Egyptians and Romans used versions on their citizens. The death tax is the third plank of Karl Marx’s The Communist Manifesto, which is a provision dictating an abolition of all rights of inheritance.

Various versions of death taxes are still being employed all over the globe today in many countries including the United States, where in addition to the federal version, there are additional death taxes in effect in over 20 states nationwide.

Taxes are real. They are so real in fact that they account for nearly 100% of all annual federal revenue. There are income taxes, corporate income taxes, capital gains taxes, payroll taxes, custom duties, excise taxes, gift taxes and generation skipping taxes, but they all pale in comparison to the federal death tax.

The IRS will not be sympathetic to your estate planning oversights. Don’t mistakenly think that the Government wouldn’t possibly come in and seize a majority of the assets from your grieving family if you don’t have your estate fully prepared with its succession planning.

When was the last time that you analyzed your projected death tax liabilities?

United States Historical Death Tax
Rates & Exemption Amounts

Year	Exemption (dollars)	Initial Rate (percent)	Top Rate (percent)
1916	50,000	1.0	10.0
1917	50,000	2.0	25.0
1918-1923	50,000	1.0	25.0
1924-1925	50,000	1.0	40.0
1926-1931	100,000	1.0	20.0
1932-1933	50,000	1.0	45.0
1934	50,000	1.0	60.0
1935-1939	40,000	2.0	70.0
1940 [1]	40,000	2.0	70.0
1941	40,000	3.0	70.0
1942-1976	60,000	3.0	70.0
1977 [2]	120,000	18.0	70.0
1978	134,000	18.0	70.0
1979	147,000	18.0	70.0
1980	161,000	18.0	70.0
1981	175,000	18.0	70.0
1982	225,000	18.0	65.0
1983	275,000	18.0	60.0
1984	325,000	18.0	55.0
1985	400,000	18.0	55.0
1986	500,000	18.0	55.0
1987-1997 [3]	600,000	18.0	55.0
1998	625,000	18.0	55.0
1999	650,000	18.0	55.0
2000-2001	675,000	18.0	55.0
2002	1,000,000	18.0	50.0
2003	1,000,000	18.0	49.0
2004	1,500,000	18.0	48.0
2005	1,500,000	18.0	47.0
2006	2,000,000	18.0	46.0
2007	2,000,000	18.0	45.0
2008	2,000,000		45.0
2009	3,500,000		45.0
2010	Repealed
2011	5,000,000		35.0
2012	5.12 Million		35.0
2013	5.25 Million		40.0

[1] 10 percent surtax was added

[2] Unified credit replaces exemption.

[3] Graduated rates and unified credits phased out for estates greater than $10,000,000

www.irs.gov/pub/irs-soi/ninetyestate.pdf

The Harsh Realities

Death (also known as inheritance or estate) taxes are a tax on the transfer of wealth from an estate to its beneficiaries. Death taxes have been victimizing illiquid estates throughout history. In the United States alone, death taxes have been used off and on since 1797. Initially, estate taxes were imposed to help the Government fight wars and then repealed once the conflicts had ceased and a peacetime was entered into.

All of these previous versions of death taxes served to prepare the American public for future versions, and the modern-day United States death tax was instituted by the Revenue Act of 1916, which included provisions for a Federal estate tax.

This tax has been in effect during every year since for nearly a century aside from a temporary, one-year reprieve in 2010. Between the conclusion of World War I and the onset of United States involvement in World War II, the top death tax rate increased by nearly 300%!

Do you want to risk leaving your estate exposed to the next big death tax hike?

From 1935 to 1981, the top death tax rate was at 70% or more, and remember, that rate is calculated on the ENTIRE value of the gross estate less any deductions. Beginning in 1982 through 2009, the top rate was “lowered” (if you can really call it that) to 65% and then eventually to 45%. It is slightly lower today.

However, for many unsuspecting and unprepared estates, this was hardly any consolation. There are literally thousands of estates’ heirs who have been left scrambling trying to avoid a fire sale of assets in order to pay the outrageous tax liabilities that were left behind.

The Victims

The list of influential people who have had their estates crippled by death taxes reads like a who’s who of American culture. Phillip K. Wrigley was the former owner of the Chicago Cubs and son of the founder of the legendary chewing gum manufacturer. Wrigley died in 1977, and by 1981, his family had sold the Cubs, reportedly to pay the taxes on Wrigley’s estate, and with it ending a nearly 60-year relationship with the franchise.

A similar fate befell Joe Robbie, the former principal owner of the Miami Dolphins. Robbie lived the American dream. From humble beginnings, Robbie became a successful entrepreneur and parlayed his successes into purchasing the Dolphins in 1965. Just as in the case of Phillip K. Wrigley, it was Robbie’s hope that the franchise would stay in his family’s hands. Unfortunately for Robbie, his estate planning did not protect him from the IRS.

Robbie died in 1990, and his wife passed shortly thereafter. Unfortunately for the Robbie family, when it came to paying its death taxes, Uncle Sam was not a patient man.  By 1994, the taxes and penalties had overwhelmed the family, who were forced to sell the team for $138 million. That may seem like a king’s ransom, but consider that not even 20 years later, the team had increased in value to over $1 billion.

The families who have been besieged by death taxes are not simply limited to sports owners either. Banking and finance giant J.P. Morgan paid a nearly 70% death tax rate on his gross estate as did John D. Rockefeller, Sr.

Elvis Presley had a staggering 73% of his estate proceeds go towards his governmental death tax liability. Elvis may be the king of rock and roll, but he was no match for the king of all taxes. In the United States today, the federal death tax is also compounded by still more estate taxes imposed on the state level as well. How do you want YOUR estate planning tale to end?

Death taxes represent the biggest estate planning hurdle for the estates of high net worth individuals to climb. Now that you are fully aware, it’s time to find the solutions.

A good start would be to contact the estate planning specialists of Teachers Pension Advisory Services and set up a free consultation.

History proves that it is not wise for the estates of high net worth individuals to take a “set it and forget it” approach to estate planning where insufficient measures are implemented years earlier only to be left alone and not account for those important changes that occur to an estate’s financial outlook over time.

The death tax requires a lifetime of planning. The TPA Services Family Wealth Division offers a higher level of life insurance services to our high net worth clients. At TPA Services, we can work side-by-side with your financial advisors to help you greatly improve your overall estate plan. We implement the life insurance programs that will serve to provide you with the ultimate source of tax-free, liquid income and eliminate all of your death tax fears.

What Can Teachers Pension Advisory Services Do For Your Estate Planning?

Teachers Pension Advisory Services is a nationwide, independent wealth-management agency. We customize our life insurance and estate planning programs to meet each of our high net worth client’s unique needs and objectives. They are designed to drastically reduce your cost of insurance by 70% or more while safely increasing your permanent benefits by millions of dollars!

In order to fully protect your estate, life insurance has to be THE essential ingredient. No other type of estate planning vehicle produces as many tax savings and tax-free benefits.

Our programs have been helping high net worth families like yours for decades to complete their estate plan and fully protect their estate against the various state and federal estate taxes that threaten them. In fact, Teachers Pension Advisory Services excels in the implementation of the same, advanced, life insurance planning strategies that have been utilized for many years by not only high-net-worth individuals but more than 70% of Fortune 1000 companies as well through corporate owned life insurance (COLI) programs.

Click these links to find out how we can help protect both your personal and business interests with millions of additional dollars in tax-free, liquid income received tax-free and growing tax-deferred.

This tax-free, liquid income is instrumental to help offset the death tax because it is a liability that is calculated based on the value of ALL liquid and illiquid assets that qualify inside of each estate.

This means that not only are death taxes calculated based the value of any cash, bonds, stocks, savings accounts or retirement plans which the estate holds but also from the estate’s holdings in illiquid assets such as real estate, art work, cars, boats or any closely held ownership stakes maintained partnerships just to name a few. These valuations often times leave the descendants of estates in shock when they discover how exposed they are to death taxes.

Interest penalties can also quickly start to accrue due to any late payments. Keep in mind that estates of the deceased are also responsible for the filing and payment of various other taxes in addition to its estate tax obligations including the estate’s final annual income taxes, gift taxes, generation skipping taxes as well as any final capital gains taxes that are also owed to the IRS. 

Start preparing your estate more thoroughly or risk having much of it wind up in the Government’s hands.

Responsible Estate Planning

Don’t allow your loved ones be caught in the tax nightmare that you leave behind. It is imperative for high-net-worth families to have an airtight estate plan to minimize and practically eliminate the potentially decimating effects of the IRS and most importantly its death tax ramifications.

In addition to offering the most sought after life insurance products that high-net-worth families can have access to, Teachers Pension Advisory Services also excels in helping our clients take a more comprehensive look at their overall estate plan.

Are you utilizing a sufficient amount of your annual and lifetime gifting exemptions?

Do you have trusts set up to protect your life insurance and other assets?

Even if you have formed an estate planning trust, is it really protecting your assets in the way it could be with a better life insurance program in place? We bring the accounting, legal and life insurance aspects of estate planning together for you and your other advisors. Teachers Pension Advisory Services takes good estate planning and makes it exceptional by working in tandem and lockstep with your other financial advisors to provide you with a more comprehensive and cost-effective estate planning strategy.

We Sell the Life Insurance that High-Net-Worth Families Desperately Need

Are you aware that most life insurance companies will not issue a new term life policy for individuals after the age of 72? The question then becomes why would you want to spend all that money on life insurance for all of those years only to wind up with nothing in return? Term policies may be effective as a safety net for younger individuals and families to guard against unforeseen circumstances, but they are not meant to be used as an estate planning tool for the estates of high net worth families.

Were you sold a second to die life insurance policy that was explained to you as a good estate planning tool? Think again. Most second to die life insurance policies start off affordable only to endure prohibitively high cost of insurance increases that in many cases will eat away at benefits that were originally thought to be guaranteed.

If you currently have a life insurance program in place, we can help you to assess whether or not you are overpaying for the amount of coverage you are receiving compared to an alternative program that is sponsored through TPA Services. We have trusted relationships with a host of A-rated life insurance companies and can offer you an array of options that will maximize your benefits at the lowest cost available. By leaning on our expertise, we can let you know if your current life insurance plan is truly the best or if someone is just telling you that to keep your business.

Just because you decide to exit your current plan and switch into a new life insurance program offered through TPA Services does not mean that any of your prior policy’s cash value earnings have to be left behind with it. The life insurance industry is constantly changing. United States tax code allows for any permanent, cash value benefits earned inside of a current life insurance policy that qualifies to be transferred completely tax-free into a far better, more up-to-date product. We will assist you in these transfers and the implementation of your new life insurance program alongside your other financial advisors.

Our Clients Beat The Death Tax

We are a fully transparent organization. Our preferred, relationship pricing for high-net-worth families and their businesses on their life insurance benefit programs cannot be matched by our competitors. We guarantee that it will drastically lower your costs for life insurance while at the same time increasing your permanent benefits by millions of dollars!

That’s right. We are talking about millions of dollars in added benefits for very little out of pocket cost that utilizes an ultra-conservative structure where the risks are virtually non-existent.

You may think you are protected, but you are not fully protected until you contact the independent, estate planning specialists of Teachers Pension Advisory Services for a free assessment and review of your current estate plan and life insurance programs.