Taxable Estate (def'n)

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MN Finance
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Taxable Estate (def'n)

Post by MN Finance » Mon Apr 03, 2017 1:05 pm

I posted a tangential questions on this about the life estate of mom and dad a few months ago... thanks for that help. This is a separate question...

After re-reading mom's trust, I came across language that made me pause. I know it's without context, but wondering what the interpretation of this might mean?

Section X(x): "If the size of the Settlor's taxable estate for federal estate tax purposes exceeds $1,000,000 at the time of the Settlor's death, the Settlor's XYZ asset shall be [such and such]. In the event that the Settlor's taxable estate for estate tax purposes does not exceed $1,000,000 at the time of the Settlor's death, then XYZ asset shall be [this and that]."

After reading this initially I had a conclusion based on what I knew mom's intent to be. After re-reading this subsequent to a discussion with another professional (not an attorney) I read this passage with a different interpretation of which argument applied [such and such vs this and that.] For reference the estate was about $2M.

Just wondering how you smart people would decide which argument applies if the total assets subject to this argument are 2M?

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Re: Taxable Estate (def'n)

Post by Leesbro63 » Mon Apr 03, 2017 1:16 pm

It's not clear what you are asking. What does "XYZ asset shall be..." mean? Shall go to so and so? Shall be kept in trust? Shall be invested in comic books? What are you actually asking?

Sounds to me like mom's estate was $2M so whatever the instructions are for an estate over $1m is what is required to be followed.

DISCLAIMER: I'm not sure I'm one of the "smart people" you are asking! 8-)

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Re: Taxable Estate (def'n)

Post by sometimesinvestor » Mon Apr 03, 2017 4:38 pm

The minimum size of a taxable estate for federal tax purposes is over $4 million(not the precise number but its easy to look up) but thereare states whose estate tax kicks in at much lower levels .It may mean that the clause has something to do with lowering estate taxes by making a charity donation to get the value of the estate to less than the level at which a tax is imposed.(while such a strategy is potentially valuable in NY I am unfamiliar with its value in other states.

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