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Money $marts: Tax plan 2010: buy big freezer
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From a tax point of view, the year 2010 will be special. That’s when the federal inheritance (death) tax completely disappears, to be reinstituted at the original (prior to Bush cuts) higher level-up to 55 percent -- beginning in 2011. Thus, for one year, 2010, and only that year, there will be no federal tax on inherited money. For sure, there will be many tax-planning discussions taking place in the U.S. Here’s one between Ivant Itall, potential heir, and Joe Abacus, a tax advisor. The time is December 21, 2009.
“Hey Ivan, how’s your Uncle Myzer doing?”
“Not good Joe, the rich old goat is declining fast, but he’s lived a good, long 98 years and managed to accumulate a nice fortune -- about $10 million.”
“Can he hold on for another 10 days?”
“I don’t know Joe. Why?”
“Well, if he goes anytime after midnight, Dec. 31, as sole heir, you stand to save a lot of money -- a few million actually.”
“How’s that?”
“There’ll be no federal taxes to pay on the estate. If he goes before midnight, well...”
“So, I have to keep him alive for another 10 days?”
“Yes, Ivan, that’s right, unless...”
“Unless what?”
“Well, I was watching a ‘CSI’ rerun the other night and they were having trouble establishing a time of death for a victim; seems the body had been frozen for a while.”
“In Miami?”
“No, Ivan, ‘CSI New York.’ At any rate, it gave me an idea for tax planning. I call it the Frozen Asset Life Extension Inheritance Protection Policy. You can be my first client.”
“Great! Okay, so I buy this policy from you, then what happens?”
“If Uncle Myzer says goodbye early, just call me. I’ll take care of everything. I’ve got to go now. I need to set up a marketing plan and get to Sears.”
“Why you going to Sears?”
“I’m going to buy a few dozen freezers. Maybe I can get a deal. By the way, isn’t your Aunt Lotta Bucks getting on in years?”
“Yes, Joe, but she’s holding on, except for a weak heart. No stress allowed.”
“Well, we have a whole year to plan for that one. Hmmm. A Life Curtailment Policy... Has Lotta ever been to a male strip club?”
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