Estate Tax Horror Stories.

Real Stories from real people...

"Boy do I have a horror story for you! My father passed away 10/90. His estate for tax purposes was assessed at 7.7 million dollars when it was re-evaluated. After six months it had not changed much so approximately 3.8 million was owed in death and estate taxes. Most of my father's estate was in real estate and shortly after the six month period after his death, real estate took a dive. And every piece of property we sold to pay taxes sold at about 40% of what it was appraised at time of death. Well it has been ten years since my father's passing and we have still not seen any money. If and I do mean if we are lucky, then maybe at the end of this year after we pay the last $350,000 to federal and pay the state, my mother, sister and I may have all of $200,000 to split between us. Great." Michael Stern

"I am 77 years old. My history of work, thrifts and efforts to save money is unbelievable. Here is my reward! All of my social security (plus more) goes for income tax. I live off my teacher's pension as I do not want to cash my investments. If I died today, I'd pay about $200,000 in death tax. I am helping a great niece to go to college. I have two great nephews coming up. All are bright children. I would like to help them - not the IRS. I had a newspaper route in college. I worked for 50¢ an hour doing office work under the program set up by President Roosevelt. I have lost money in investments. I went to work when I had a death sentence with lung cancer in 1967. I didn't miss a day when I was told I could only live three months at the most. I am still working. I have a tenant and I tutor ESL students. I do almost all my own work and cooking. I have never had a bill I didn't pay on time. The way things are now what the nursing home doesn't get (if I'm that unfortunate) the IRS will! What did I make all this effort for? Our laws need to be changed but I have no clout!”Ida Prichard - Seattle, WA

This is a true story about Ray. Ray is dead now. He died earlier this year. He owned a service station on a corner. He had this service station for 27 years. During that 27 years, other service stations were built on the other three corners, the intersection grew busy, the roads forming that intersection were expanded to four lanes. So it was a good place for his business. He had two service bays plus a car wash. He had some old pumps and old equipment. He cleared about $70 thousand a year - not wealthy, but it was a good living. His wife handled the books for the business. His grown son worked there and was eventually going to take over the business. When Ray died he had a $50 thousand term insurance policy, $60 thousand in municipal bonds (which were income tax free, of course), $174 thousand in his retirement plan, and, of course, the service station. A few months after he died, his wife also died. Upon the death of his parents, the son discovered that the land on which the service station sat had appreciated over the years and was now worth $1.7 million. The service station and equipment was worth $158,000. He also learned that his father's retirement plan was funded on a before tax basis, so not only would he have to pay estate taxes, but income taxes would be due on the retirement. The son was now in quite a situation, and he began looking for a way to pay taxes on the almost $2 million estate. The son said "If I can run this as well as my father has, or even better, I can make maybe $70 thousand a year, but I am going to have to have someone to keep the books, so maybe 70 is a little tight." He had no proven track record, so the only thing he could do was to borrow against the land and equipment to pay the estate taxes; however, he could not cover the interest on the loan. Ray's son will have to sell this business. He has gone from a situation where he looks wealthy, to a situation where he will have to sell the very thing that was his livelihood.A Story About Ray

"My family has recently experienced a triple tax. My grandfather paid income taxes on his income when he earned it. When he passed away two years ago it was taxed again. My mother then suddenly passed away this past spring and we were taxed again. Effectively an 88% tax rate." Lynn Marie Hoopingarner - West Hollywood, CA

"We currently must spend over $100,000 a year on life insurance to cover future death tax concerns. These monies could be spent more wisely within a business on growth programs." Karen B. Caplan - Los Alamitos, CA

"We just recently learned that we would not have the cash to pay estate taxes if we were to die. The company would be liquidated. Life insurance will cost $15,000-$45,000 for a year. For $2,000,000 in coverage - which would still not cover all estate taxes. We're in limbo on what to do. Attorneys are currently advising us." Karen Oman - Minneapolis, MN

"The business would be sold and all jobs would be lost." Bonnie Holland - Albuquerque, NM

"My business would substantially suffer, if not destroyed completely after principal's death." Kathleen Colellar - Farmingdale, NY

"It is patently ridiculous to pay tax twice - we have already paid on both our corporate and personal incomes. Why do we have to pay for our sweat equity? (Spent increasing the value of our businesses, usually at the expense of our health and our families, who won't be able to afford to inherit it)." Lisa Hickey - Lakeland, FL

"We are labor intensive. We do not make big profits in a service industry to pay for expensive life insurance, as I am 73. It is very difficult to be sold to pay this situation, as my house would have to be sold. Everything that I have worked for all of my life would be taken from my heirs to pay the estate tax on the business so that my loyal staff could continue to work and have jobs." Mary Rife - Miami, FL

"Responding to advice from both attorney and accountants, we purchased life insurance to try to plan for estate taxes. To date, over $400,000 in premiums that could have been invested in our business!!" Suzanne Sykes - Waldwick, NJ

"Being a single person, I have no way to protect any of my assets. So my daughter who works with me could very possibly have to sell the business or close it." Penny Hall - Doraville, GA

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