You wrote:

 >I don't understand why it would be illegal to sell
> your farm, whatever the value, to your son or granddaughter for a
> token fee and they become owners. Or have them legally become co-owners.

This is simply illegal and would be seen as an attempt to avoid taxes.
In order to do such a thing the farmer or landowner or parent or uncle or
whomever would have to sit down with a tax and estate attorney years ahead
of time and figure out a way to gradually sell-out to an heir and it could
not be at a "token" price. It would have to be at the fair market price and
most often the heir just cannot afford to pay that.
I am absolutely certain that it is illegal according to IRS estate taxation
rules to "give" (or sell at a reduced price)  property that is worth more
than one million dollars with the expectation of avoiding the estate
tax.....unless the recipient is able to pay a gift tax which is also a very
high rate and, again, requires cash something most farmers do not have..
According to current law a person can give away a Once in a Lifetime, tax
free amount of about one million dollars to one or more people and that
could include land . That amount will go up a bit in 2007 or 2008 and a bit
more until 2010 when the Throw Momma From the Train year kicks in.  Trying
to evade the death tax by giving something far less than its appraised value
is illegal. If not, then there would be no problem with having a death
tax....everyone could just give it away! NOW....that being said, a parent
can give something away that is appraised at less than its *real* value but
sooner or later the taxman cometh, proper assessments are made and there
will be a tax to pay.
I can tell you this, it is pretty upsetting to be told upon the death of a
parent or grandparent that there are several MILLION dollars in death taxes
due! Unless someone is already a cash rich millionaire, the only only only
recourse is to "sell the farm".....usually to a developer. And then comes
the good part: selling everything and then having to fork it all over to the
government!



----- Original Message -----
From: "Sunshine49" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Saturday, January 06, 2007 7:13 PM
Subject: Re: Carter's Grove to be sold


> Are you sure about the illegality of selling a million dollar
> property [or any other] for $1? My mother had me become a co-owner of
> her property [worth far less than $1 million] some years before she
> died. She lived there, paid all costs and expenses, but when she died
> there was no problem, no taxes, I was already part owner of the house
> and became full owner. I know, as far as Medicare goes, it is illegal
> to hand over or sell for a nominal fee your house to a family member,
> within a certain number of years prior to you filing for Medicare.
> That keeps people from gaming the system. Not that I think the system
> is all that great. I don't understand why it would be illegal to sell
> your farm, whatever the value, to your son or granddaughter for a
> token fee and they become owners. Or have them legally become co-owners.
>
> Nancy
>
> -------
> I was never lost, but I was bewildered once for three days.
>
> --Daniel Boone
>
>
>
> On Jan 6, 2007, at 6:29 PM, [log in to unmask] wrote:
>
>> Original Message -----
>> From: "Anne Pemberton" <[log in to unmask]>
>> To: <[log in to unmask]>
>> Sent: Saturday, January 06, 2007 12:26 PM
>> Subject: Re: Carter's Grove to be sold
>>
>>
>>> Two financial tools are useful in preparing for the inheritance
>>> tax. The one
>>> most suggested is to purchase a life insurance policy designed to
>>> pay the
>>> inheritance taxes upon death.
>>
>> Such a policy would be very expensive....the premiums for an
>> elderly landowner almost prohibitive if, indeed, he could even
>> obtain a policy. Remember, these are people who are not "rich".
>> They do not usually have tons of cash sitting around with which to
>> go buy expensive insurance policies. Their wealth is in their land
>> which no one in the family wants to sell. Most of them just want to
>> do what they've always done: be left alone to farm.
>>
>> The other, perhaps a little fraught with
>>> potential mischief, is for the pre-dying elder owner to pass title
>>> to the
>>> next generation before death.
>>  My mother-in-law did this, selling her home to
>>> her daughter for $1 in exchange of a home to live in until her
>>> death, and
>>> there was then no estate to pay taxes on (also the value was below
>>> that of
>>> the inheritance tax). Financial planning and responsibility in
>>> life can
>>> offset the effects of the inheritance tax.
>> You provided your own response when you said that the value of the
>> house was below the inheritance tax rate. If the property is below
>> the minimum amount to be estate taxed then there was never an
>> estate tax problem. It is totally illegal to sell for one dollar or
>> give away real estate that is valued at more than one million
>> dollars to an heir or anyone else.
>> The secret to successfully dealing with the estate tax is, voila!
>> Repeal it.
>> Or, at the very least, fix it so that a farmer isn't taxed at the
>> exact same rate as Bill Gates and Warren Buffett and other
>> billionaires who tend to think that the death tax is
>> justifiable......to which I say, I guess they do! Their heirs could
>> pay 99% of the Gates or Buffett estate and STILL be billionaires.
>> The estate tax is one of the most onerous, most unfair, most
>> egregious examples of the government's attempts to redistibute wealth.
>> If anyone ever gets to studying the way it has been handled it
>> would blow your mind!
>> For example, under current law the death tax is being incrementally
>> reduced until the year 2010 when it disappears entirely for, what?
>> Twelve months. At the end of which (precisely 12:01 A.M., January
>> 1, 2011) the entire thing comes roaring back full tilt to the level
>> that is was  before these "reforms".....which is why cynics call
>> 2010 the "Throw Momma From The Train Year".
>>
>> To subscribe, change options, or unsubscribe, please see the
>> instructions
>> at http://listlva.lib.va.us/archives/va-hist.html
>
> To subscribe, change options, or unsubscribe, please see the instructions
> at http://listlva.lib.va.us/archives/va-hist.html
>

To subscribe, change options, or unsubscribe, please see the instructions
at http://listlva.lib.va.us/archives/va-hist.html