Electronic Design

Bob's Mailbox

Dear Bob:
Re: The letter on "Tax-Deferred Stuff" by Scott Baer (Electronic Design, April 19, p. 89). Scott's dear old mother-in-law could have gone to see an attorney who specialized in "trusts." A "will" is not enough, because Uncle Sam will take all of the inheritance taxes from him. It would raise his tax bracket, as well. With the "trust," he gets a 100% tax-free gift inheritance from his mother-in-law. It is sad that the public doesn't know the difference between "trust" and "will." However, it is a good time for anyone else to start NOW. Get an attorney to prepare all of the trust legal paperworks at a reasonable attorney charge (average $1500). (It's a dirty, nasty job, but somebody has to do it—explain how you need a trust to keep from getting screwed by these inheritance deals. The new relaxed tax games for inheritance make it sound like people who don't have a million dollars don't have to worry about this stuff. WRONG!! /rap)

I agree! I learned about this through a seminar last year from an attorney who lectured all about the difference between "wills" and "trusts." I was totally shocked! I always thought a will was good enough. Unfortunately, it was not. I dunno why or how the will was invented, instead of using the trust as a full 100% tax-deferred inheritance. What's more, why do I keep hearing the popular word "will," rather than "trust," through my associates in the past few months? It seems that a will is the cheap and easy way out to receive the inheritance. But, people keep forgetting that there is TAXABLE inheritance if using the will instead of trust—as you can see from Scott Baer's response.

He was forced up to a high tax bracket because he received a big inheritance. If he could have guessed this would happen, a small ($2000) investment in a "trust" would have avoided most of this problem. Always file a trust, not a will, when there's any significant inheritance. (Rich guys got lawyers to invent loopholes and trusts to avoid inheritance taxes. Now, you don't have to be a millionaire to need that protection for YOUR estate, too. /rap)

Anyone who went through the tax-shelter schemes got the money for themselves, not for the country. Hence, millions of dollars saved for their big luxury homes and yachts at the harbors. Why didn't the tax men get the shares from them? That's the thing. Tax men don't like to monkey around with CPAs who have better education on tax laws than them! Have you noticed that tax men tend to screw around with people who don't have CPAs? That's where we heard all about those IRS horror stories last year. None of the testimonial people had CPAs on their sides! Clever IRS strategy. CPA is my "IRS audit insurance"! (Knock on that wood. /rap)

For example, many years ago, I thought I could go by the 1040EZ for easy tax refunds. But, I learned that if I go by the 1040 long form, I'll receive MORE tax refund! Geez, why couldn't Uncle Sam tell me about that??? Uncle Sam's duty was to provide me all of the tax forms, but he wouldn't tell me which one was best for my tax refund! I had to LOOK for the right form to fill out to receive the maximum refund as much as possible. Since there were so many different tax laws and rulings being changed every year, I lost track of them and didn't have much time to do it. So, I hired a CPA to do it for me annually.
via e-mail

Yeah, but do you trust your CPA to put in all the right deductions, and no improper ones?—Good luck!—RAP

All for now. / Comments invited!
RAP / Robert A. Pease / Engineer
[email protected]—or:

Mail Stop D2597A
National Semiconductor
P.O. Box 58090
Santa Clara, CA 95052-8090

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