Ratz right now it's 5 million, I believe a married couple can exempt 10 million creativly. A lot of farms get chopped up and sold because kids don't want them. At time of death you can get a new appraisal call a time of death appraisal. That sets you basis. You can then sell and there are no taxes for capital gains or inheritance (if under threshold) so long as you don't sell above appraisal value. If grandpa sold before he died he may have been hit with massive capital gains. I did this in east Texas, just haven't got around to selling yet. Make sure you let appraiser know what you are looking for. I brought in a buddy from out here to do mine.

Family trusts are also a really good way to avoid inheritance taxes, particularly when the asset involved is real estate owned without a lien on it.

My parents were doing the gifting thing, but then my dad got sick and the sunset on the 5 mil tax was about to trigger to kick it back to 1 mil. We didn't trust the useless congress to renew it in time, and besides as someone else mentioned there is the retroactive issue.

The amount of ridiculous maneuvering we had to do just to preserve his estate that he had already paid taxes on for 50 years would make your head spin. Split estate, set up as trusts that trickle down to trigger more trusts, paperwork a foot high, meetings every week with lawyers and financial planners. It was absurd and it caused a whole lot of anxiety, problems and expense that we certainly didn't need at the time.

I hope I never end up in an audit, I'm not likely to be civil to those POS.

Atta boy! Go tell the IRS how ignorant they are, then get back to us.

Well yeah, that's why I hope I never get audited --- it isn't going to end well for me after telling them what I think of them.

J


Inheritance tax is high too, I wonder if it will ever come down. My dad told us when he is gone there would be almost nothing left for us. What he is doing is gifting the max amount to us every year. Its all going into retirement and college savings either way but I have always thought that tax was rediculously high.

I thought inheritance tax didn't kick in until it was around $5 million per person.

it doesn't.

Here's another consideration for putting assets into trusts, setting up accounts as joint owner or POD ('paid on death'), etc:

Such assets do NOT go through probate. Anything that is handed down by will goes through probate court and becomes a matter of public record. Creditors and others can dig a little to find out who got what.