Weaving the Strands: Business, Economics, and Tax Policy 2.0

[Kepler]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Probably. Hopefully whoever is lucky enough to be that way has plenty of "insured" investments (like a savings account). Given what happened in 2008 and how we deregulated those clowns again I don't trust having all my eggs in a diversified Wall Street portfolio.

Well, if it comes to that your insurer has his funds in the same place. If your 401(k) fails, your insurer is also going bankrupt. That's life at the mercy of the banksters.

 

[ScoobyDoo]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Well, if it comes to that your insurer has his funds in the same place. If your 401(k) fails, your insurer is also going bankrupt. That's life at the mercy of the banksters.

There's always a mattress. I would have been better off with that from 2000-2008.

 

[dxmnkd316]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Well, if it comes to that your insurer has his funds in the same place. If your 401(k) fails, your insurer is also going bankrupt. That's life at the mercy of the banksters.

Most life insurance plans are invested heavily in bonds. Not all, mind you. So as inflation goes up, those dividends are going to be hurting.

 

[dxmnkd316]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

There's always a mattress. I would have been better off with that from 2000-2008.

Well, yeah, but unless you retired between 2008 and 2013, you have recovered everything and then some.

 

[dxmnkd316]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Ok, sorry for the triple post, but I'm reading now that whole life policies are NOT protected from the estate tax. They are protected from income taxes though. So why would you use them to protect inheritance?

 

[ScoobyDoo]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Well, yeah, but unless you retired between 2008 and 2013, you have recovered everything and then some.

Actually no. I'm still massively behind what I was told my wealth would be at this point. You don't make up that fast when you have 8 years of negative overall return.

 

[dxmnkd316]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Actually no. I'm still massively behind what I was told my wealth would be at this point. You don't make up that fast when you have 8 years of negative overall return.

See, that's the problem.

Edit: In fact, I don't see how it's possible to not have recovered all of your retirement by now unless you were heavily invested in a company that went in the shtter. Or you got some really bad advice.

 

[ScoobyDoo]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

See, that's the problem.

Edit: In fact, I don't see how it's possible to not have recovered all of your retirement by now unless you were heavily invested in a company that went in the shtter. Or you got some really bad advice.

What do you mean by recovered? I expected to be at X and I am at Y. It's a well diversified mutual fund retirement account. Certainly I have made up the money I lost and have grown somewhat from there. Still not good enough and where I needed to be to be happy with what my money was supposed to do.

As far as I can tell there's a lot of luck involved just like anything else in life. No big deal. I'm not going to sit and cry about it, just stating my experience.

 

[FreshFish]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Ok, sorry for the triple post, but I'm reading now that whole life policies are NOT protected from the estate tax. They are protected from income taxes though. So why would you use them to protect inheritance?

It depends upon who owns the policy. Insurance proceeds are only subject to estate tax if the insured owns the policy. If someone else owns a policy on the insured's life, then there is no estate tax on the proceeds, generally speaking.

Trust and estate attorneys collect big bucks drafting trusts to own policies on behalf of family members specifically to keep the insurance proceeds out of the transfer tax system.

 

[dxmnkd316]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

What do you mean by recovered? I expected to be at X and I am at Y. It's a well diversified mutual fund retirement account. Certainly I have made up the money I lost and have grown somewhat from there. Still not good enough and where I needed to be to be happy with what my money was supposed to do.

As far as I can tell there's a lot of luck involved just like anything else in life. No big deal. I'm not going to sit and cry about it, just stating my experience.

Well, yeah, the stock market is basically gambling. You can't use expected values especially when the market was so grossly overpriced. Right now the market is right where it should be in terms of returns based on 60 years of data. If you take the log of the S&P500 since 1950, the current price is dead on the line, maybe ever so slightly below it. The 90s were a lie when the tech bubble burst and 2008 collapse was a grossly oversold market.

Recovered meaning the value based on where it ACTUALLY should have been based on long-term data (25+ years), not short-term (<10 years).

 

[St. Clown]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Ok, sorry for the triple post, but I'm reading now that whole life policies are NOT protected from the estate tax. They are protected from income taxes though. So why would you use them to protect inheritance?

They pay out to the designated beneficiaries tax free. Basically, if you expect your inheritance tax to be around $7MM, you take out a policy for $7.5-8MM, for some wiggle room. That money is then used to pay the tax if your estate isn't liquid (like a farm or family business).

 

[St. Clown]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

It depends upon who owns the policy. Insurance proceeds are only subject to estate tax if the insured owns the policy. If someone else owns a policy on the insured's life, then there is no estate tax on the proceeds, generally speaking.

Trust and estate attorneys collect big bucks drafting trusts to own policies on behalf of family members specifically to keep the insurance proceeds out of the transfer tax system.

It doesn't matter who took out the policy (owns it), it matters who received the payout.

 

[dxmnkd316]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

They pay out to the designated beneficiaries tax free. Basically, if you expect your inheritance tax to be around $7MM, you take out a policy for $7.5-8MM, for some wiggle room. That money is then used to pay the tax if your estate isn't liquid (like a farm or family business).

That has to be an absolutely insane premium. There are other ways to get yourself under the $5 million. Say annual gifts to all of your heirs under $13k. Or irrevocable trusts maybe?

 

[St. Clown]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

That has to be an absolutely insane premium. There are other ways to get yourself under the $5 million. Say annual gifts to all of your heirs under $13k. Or irrevocable trusts maybe?

There might be. I'm not in the estate planning business, so they would know all the tools available, and which ones were best for various scenarios. The premiums would be high, given when most people realize that they've successfully made a fortune large enough to be subjected to the excise tax, unless they were an early success and had the policies written some good amount of time prior to actuarial death.

 

[joecct]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

You lost me here. I'm not connecting the dots.

I think he's saying that unless you're replacing essential income to dependents that's the most you should be insured for.

Funerals cost $10K+ (Mom was cremated and buried for $14K). That's a lot of change for some people and ready cash may not be available to pay for it. An term insurance policy that pays out around $15K should not cost too much.

 

[dxmnkd316]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Gotcha. Honestly, you'd need to look at the premiums and figure out if that's worth it.

 

[FreshFish]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

That has to be an absolutely insane premium. There are other ways to get yourself under the $5 million. Say annual gifts to all of your heirs under $13k. Or irrevocable trusts maybe?

When you look at the premium as a percentage of the insurance benefit, it's quite reasonable. 1.5% to 2.0% per year for people in their 50s for lifetime coverage. and if the insurance is owned by an irrevocable trust, you only need an insurance benefit equal to half the estate value (ignoring the exemption for simplicity). For someone who owns real estate or a closely-held business, it's about the only tool available unless they want to give up ownership and control. If your real estate throws off 6% per year, you use 0.75% to 1.0% to fund the premiums and reinvest the remaining 5.0% - 5.25%.

 

[ScoobyDoo]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Mitch now taking credit for the economy.

http://takingnote.blogs.nytimes.com...73522000&bicmp=AD&smtyp=aut&bicmlukp=WT.mc_id

You cannot make this stuff up.

 

[Rover]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Mitch now taking credit for the economy.

http://takingnote.blogs.nytimes.com...73522000&bicmp=AD&smtyp=aut&bicmlukp=WT.mc_id

You cannot make this stuff up.

He's really selling out The Boner as being impotent here. The economy wasn't happy with a GOP House. It was only the GOP Senate that made it go? Methinks he's going to get a call from the chain smoking, orange skinned, sobbing boozer after he reads that.

 

[joecct]

Re: Weaving the Strands: Business, Economics, and Tax Policy 2.0

Mitch now taking credit for the economy.

http://takingnote.blogs.nytimes.com...73522000&bicmp=AD&smtyp=aut&bicmlukp=WT.mc_id

You cannot make this stuff up.

He's really selling out The Boner as being impotent here. The economy wasn't happy with a GOP House. It was only the GOP Senate that made it go? Methinks he's going to get a call from the chain smoking, orange skinned, sobbing boozer after he reads that.

Sure - it works like this - the GOP prevented the worst of the excesses from the Democratic (senate) majority and administration from taking effect. This allowed the economy to grow without massive government interference.

See? It's all how you spin.....