Posted by drew on March 21, 2000 at 09:19:34:
Dave,
Just sent you an email to clear this up for you. Let me know if you’d like any other info on this.
-drew
Are you a TOP 2%er; or a bottom 98%er… - Posted by David
Posted by David on March 16, 2000 at 17:58:29:
According to the April, 2000 edition of This Old House Magazine, only 2% of the estates are subject to the Federal Inheritance Tax. This year the dollar threshold for federal tax is $675,000. That means that 98% of the population dies with less than $675,000 net assets. Are you now or will you in the future be in the top 2% or the bottom 98%? The choice is yours to make. Now I?m not advocating dying with lots of assets. Spending the assets and enjoying your life is more important. But on the other hand you don?t want to spend everything either.
There?s lots of ways to make money and graduate into the Top 2%. Many have inherited more than $675,000. Top athletes and entertainers command more than $675,000. Many others have made money in the stock market, primarily with high tech stocks. Still others have made it into the Top 2% by starting their own business.
All those methods can work especially picking your parents. Mine aren?t named Rockefeller or Trump. Real Estate is imho the best and easiest way to get to the Top 2%. You can start with little or now cash, assets, and even credit. You control your own destiny, and you can be as little or as big as you want. The odds are against you 49 to 1 that you will NOT make it into the Top 2%. But if you want to and are willing to learn and work for it you can graduate into the Top 2% of your class.
fwiw,
David
Using your numbers, the odds are 98:1 - Posted by Dave
Posted by Dave on March 19, 2000 at 14:10:22:
You say that two of 100 estates are subject to inheritance tax, then go on to say that “The odds are against you 49 to 1 that you will NOT make it into the Top 2%”. Overlooking the double negative, I interpret that you mean the odds are 49 to 1 against making the top 2%.
When you are computing the odds against reaching the 2% group, it isn’t a simple arithmetic average of 49:1. Instead you need to consider how many won’t make it. Since 98 of 100 taxpayers won’t make the 2% group, the correct odds for your example are 98:1 against.
To further illustrate, consider instead a lottery. There are 100 possible winning numbers and you have two of them. There are still 98 possible numbers that could win while you will still lose. There is only one winning number, and since 98 possible numbers can beat you, the odds are 98:1 against your winning. If you only had one number, your odds would then be 99:1 against winning. That is why purchasing a lot of chances in the state lottery does not significantly improve your chance of winning.
explain… - Posted by tang-0-rang
Posted by tang-0-rang on March 19, 2000 at 10:44:55:
what is IMHO, and FWIW?? please excuse the crudeness of my question, as I cant seem to find my de-coder ring.(smile)
Todd Williamson
Goal-To die a pauper! - Posted by Bud Branstetter
Posted by Bud Branstetter on March 17, 2000 at 10:18:35:
I definately want to be in that 98% that pays no inheritance tax. I once heard the saying that as an investor you want to own the old peoples home when you need to be in one. With the government requiring a spend down of assets before being able to have medicaid pay I have modified the goal. I not only want to own the place, I want the government to pay for me to be there.
By putting assets in family limited partnerships or LLC’s I can gift away the asset while retaining the income. If the situation arises I can terminate myself and therefore have no income nor assets.
The morality of this approach is no different than structuring to minimize income taxes. Roth IRAs and 1031 can pass assets to heirs without that big tax hit.
Re: Are you a TOP 2%er; or a bottom 98%er… - Posted by Laure
Posted by Laure on March 16, 2000 at 20:27:22:
Right you are ! Only 2% are ignorant to the laws that allow us to escape inheritance taxes. Check our favorite attorney, Bill Bronchich…
Laure 
It’s all about decision making - Posted by Lisa in Oz
Posted by Lisa in Oz on March 16, 2000 at 20:11:41:
Now I don’t think everyone should live their lives like mine, but I’ve made some decisions in my life that were not always easy. The biggest decision was not to have children and focus on living an interesting life and making money. Sound selfish? When I die, my assets will go to charitable foundations–not charities. That’s just me and I understand that I’ve made a trade-off in some ways, but I have a good time so I don’t think about it much.
My point is, the people I know who are successful have made decisions that the bottom 98% weren’t willing to make. Not only do you have to make hard decisions at times, but you have to be able to stick to them.
Sorry about the airy-fairy stuff, as they say in my part of town.
Re: Are you a TOP 2%er; or a bottom 98%er… - Posted by GIO
Posted by GIO on March 16, 2000 at 19:37:29:
$675000 doesnt seem like very much —
Does it ?
and 49 to 1 , i dont think our odds are that bad —
Are they ?
Re: Are you a TOP 2%er; or a bottom 98%er… - Posted by Rob FL
Posted by Rob FL on March 16, 2000 at 18:20:40:
I can’t say that my personal net worth is over that threshhold yet, however I know many people who are.
The point I want to make is that most people with any brains do some estate planning to avoid paying all those stupid estate taxes. The 2% who end up paying are (1) people that are so wealthy that they cannot find a way to avoid paying these taxes when they die and (2) people who did not use good estate planning.
Bill Bronchick has some great ideas on estate planning on his Legalwiz site. You may want to read up on it.
So if I bought 50 tickets… - Posted by drew
Posted by drew on March 20, 2000 at 09:13:32:
…out of the 100, then you would calculate my odds of winning as 50:1??? Actually my odds would be 1:1 or a 50-50 chance of winning since I have half the tickets.
Your 99 to 1 analysis is correct, but when you buy two tickets your odds are 98:2 (or 49:1), not 98:1. Big difference.
You might want to think this through again.
-drew
In my humble opinion & for what its worth…(NT) - Posted by David
Posted by David on March 19, 2000 at 10:48:23:
nt
Re: Bud, don’t ever “terminate youself”! nt - Posted by Stacy (AZ)
Posted by Stacy (AZ) on March 17, 2000 at 11:07:22:
.
Improved odds possible IMHO - Posted by Mark WA
Posted by Mark WA on March 19, 2000 at 01:52:57:
I bet the odds improve dramatically “just for showing up!”. 49 to 1 probably includes folks lost in a fog or afraid to try something new. My guess is it goes to 10:1 or 5:1 just by becoming aware. And using info on this sight is all the better. Of course the key is action.
It’s a common error,… - Posted by Dave
Posted by Dave on March 20, 2000 at 21:46:00:
You have confused “odds” with “probability”. They aren’t quite the same.
Let’s go back to the 100 number pool with only one winning number drawn. If you hold only one number, then your PROBABILITY of success is 1 out of 100 or 1%. Your ODDS are 99 to 1 against winning because there are 99 possible numbers that could beat you.
Now give yourself two numbers of the possible 100. Your probability of success, when only one number is drawn, is 2 out of 100 – 2%, or, one-fiftieth. But now your odds are 98 to 1 against winning. The fact that you hold two numbers this time simply reduces the pool of possible numbers that could beat you. Remember that only one number is drawn, and that if the winning number matches either of the two numbers you hold, you win. But, there are still 98 possible numbers that could be drawn where you lose. I agree that your PROBABILITY of winning has doubled when you hold two numbers, but your ODDS do not significantly improve when you have two numbers instead of just one. In this case, your odds are now 98 to 1 against winning – a slight improvement over odds of 99 to 1 against.
By extrapolation, for your odds to reach 49 to 1 against winning, you would have to hold 50 of the 100 possible winning numbers.
Now this is way off the topic for this board. I suggest that, if you would like to continue this discussion, let’s take it offline.