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Message:: [QUOTE="Gipper1985, post: 836064, member: 22390"]Since (1) has been explained by GDJMSP I will try to explain question (2). For starters if your kids pay taxes they are probably already getting hosed by the IRS.   When you "kick-off" as you put it it will be up to your executor to take an inventory of everything you owned at the moment of kick-off.  All these items are required to be valued at there fair market value.  Cash and securities are easy to value but things like real estate and collectible coins would usually require and appraisal.  Once the total value is determined the executor can deduct any liabilities you owe when you kick off.  This net number will be used to determine if your estate owes any tax. Congress has played alot of games with this number over the years and its future is currently undefined.  Once they get around to dealing with it you can be relatively certain it will fall somewhere between $1,000,000 and $5,000,000.  If the number is $1,000,000, for example, your estate will owe tax on the net value of your estate above $1,000,000. The nice thing about this, if your estate is not taxable, is whatever your estate items are valued at the date of kick-off becomes the cost/basis for those people you pass the items down to.  For example if you buy a coin for $100 during your lifetime and you sell for $500, you have a $400 taxable profit, but if your kids inherit the same coin valued at $500 when you die, then they can sell it for $500 and have a zero profit.  I think alot of people think they are getting over on the IRS by not reporting a collection when they die, but they may actually be depriving their heirs of an increased cost/basis. If you plan to have a sizeable estate when you kick off, depending on what the current law is, you should really talk to a tax professional because there are various strategies of moving value of your estate to your kids way before you kick off.[/QUOTE]

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