Inheritance tax is a tax levied on the wealth left by taxpayers after their death. In order to prevent taxpayers from distributing property to their children, relatives, and friends in the form of gifts while they are still alive, the gift tax is enacted in the United States. The inheritance and gift taxes are combined and levied uniformly to avoid taking advantage of the differences in inheritance and gift tax rates to achieve tax evasion.

1. Comprehensive inheritance and gift tax

(1) Gift tax. In the current U.S. federal tax law, estate and gift taxes are combined into one. The amount of gifts during the taxpayer's lifetime will affect the amount of estate tax after death. The two share the same comprehensive tax deduction and are subject to the same tax rate. Therefore, taxpayers' gifts should be arranged in a unified manner with the estate plan. The tax law stipulates that each taxpayer can allow a comprehensive tax exemption of 600,000 yuan in his lifetime, which means there is a gift tax exemption of 10,000 yuan per year. Taxpayers must use it carefully to ensure that Reduce estate and gift tax burdens.

In the United States, paying gift tax is the responsibility of the donor. The recipient does not need to pay this tax. The gift can be cash, stocks, jewelry, annuities, life insurance, real estate, etc. For minors, trust procedures are generally required to gift real estate. Usually, minors do not have the ability to sign independent contracts and can only be managed by a designated guardian. Once the child reaches adulthood, the guardianship relationship will automatically terminate.

US tax law stipulates that regardless of whether the property is transferred directly or indirectly, as long as the recipient does not pay the donor a considerable consideration, it is within the scope of gift tax. The direct transfer of property includes the sale or exchange of property; the indirect transfer of property includes loan exemption, insurance contract transfer, property transfer trust, and interest-free and low-interest loans between relatives and friends, etc.

U.S. tax law stipulates that the basic conditions for a gift are: 1. The donor must be of sound mind and have capacity; 2. The donor must be willing to make a gift; 3. The recipient has not refused the gift; 4. The recipient has all the legal and physical rights to the gift; 5. The donor has no right to take back the gift after the donation; 6. The recipient has not paid the equivalent in exchange for the gift.

However, charitable donations, property transfers between spouses, payment of education and medical expenses for others, and joint bank accounts that have not been used by the non-contributors do not need to pay gift tax.

Taxpayers who receive foreign personal gifts or inheritance exceeding 100,000 yuan within one year must declare to the tax bureau. Otherwise, they will be fined 5% per month, and the maximum penalty rate can reach 25%. However, if the amount is related to the recipient's tuition and medical expenses, and is directly remitted to the relevant educational and medical institutions, there is no need to declare it.

(2) Inheritance tax

The inheritance left after death includes the deceased’s exclusive property and the portion of the disabled person’s owned property, accounts receivable, retirement Funds, pensions, life insurance, etc. should also be included in the gross amount of the estate, but the various debts of the deceased and the expenses incurred after the death, including loans, accounts payable, medicine, burial and funeral expenses, etc. must be deducted. Including various current-year taxes, certification and administrative expenses, gifts of property to the surviving spouse, and adjustments to qualified donated property, the net amount of the estate is determined, which is the tax base on which the estate tax is payable. According to the tax law, each person has a tax-deductible inheritance gift amount of $600,000 in his lifetime, and the comprehensive tax deduction based on the tax rate is $192,800.

(3) Tax rate

The U.S. estate and gift tax adopts a progressive tax rate, with the lowest tax rate being 18% and the highest tax rate being 55%. See the table below:

Estate and gift tax rate table

Minimum tax rate on net comprehensive tax chargeable %

0-$10000 0 18

$10000-20000 $1800 20

$20000-40000 $3800 22

$40000-60000 $8200 24

$60000-80000 $13000 26

$80000-100000 $18000 28

$100000-150000 $23000 30

$150000-250000 $38800 32

$250000-500000 $70000 34

$500000-750000 $155800 37

$ 750000 -1000000 $345800 39

$1000000-1250000 $365800 41

$1250000-1500000 $448300 43

$1500000-2000000 $555800 45

$2000000-2500000 $780800 49

$2500000-3000000 $1025800 53

$3000000 and above 55

(4) Tax exemption

The revised tax law in 1997 will be a gift The tax exemption amount has been significantly increased.

Annual tax exemption amount

1997 $60000 $192800

1998 625000 202050

1999 650000 211300

2000 675000 220050

2001 675000 220050

2002 700000 229800

2003 700000 229800

2004 850000 287300

20 05 950000 326300

After 2006, 1,000,000 345,800

Due to the adjustment of the tax exemption, estates, wills, trusts and other plans will have to be revised. The new tax law allows families to own businesses in addition to 600,000. In addition to the comprehensive tax exemption, a special tax exemption of 700,000 is also allowed. Family-owned business A family-owned business, the family members must control the business, and need to own more than half of the business and participate in management. Family members refer to immediate relatives such as husband and wife, parents, children, and grandchildren. The deceased must be a U.S. citizen or a resident foreigner. The family business cannot be a stock listed company, and more than 35% of the income must not come from a personal holding company.

Usually inheritance tax is declared within 9 months of the death of the inheritance donor. The tax law allows the first 1 million yuan of inheritance to be paid in installments and enjoy a low interest rate of 2%. The interest rate on the balance of other tax liabilities can be 45% of the usual installment tax rate.

Each tax filer can give the recipient a gift tax exemption of 10,000 yuan per person per year. For example, if there are three parents For children, parents can give each child 10,000 yuan each year, and 60,000 yuan can be exempted from gift tax.

2. Donations and leasebacks and foreign gifts

(1) Donations and leasebacks

For taxpayers with large amounts of income and high applicable tax rates, the establishment of In the form of a trust, business machinery and equipment, real estate, etc. are donated to the trust beneficiary. The trust beneficiary is often the child of the tax filer, and then the property is leased back to the trust beneficiary and continues to be used, thereby achieving tax savings. Purpose.

(2) Declaration of foreign gifts

The United States is a country of immigrants. Many tax filers have close relations with foreign countries, and foreign gifts often occur. The Small Business Job Security Act of 1996 stipulates that Americans who receive gifts of more than $10,000 from abroad each year must report it to the tax bureau. Americans here refer to foreigners with U.S. citizenship or residents; gifts include gifts during lifetime and bequests after death; the declared amount refers to the accumulated amount, and the so-called rights exceeding 10,000 yuan refer to gifts from foreign companies or overseas partnerships. , if the donor is a foreign individual or estate, the cumulative gifts must exceed 100,000 yuan before reporting is required. The time to declare foreign gifts is consistent with the annual personal income tax filing time. For those who fail to declare on time, in addition to requiring supplementary tax returns, there will also be a monthly penalty of 5% based on the amount of the gift, with a maximum penalty of 25% of the amount of the gift.

3. Estate planning

Estate planning is when the person concerned makes proper arrangements for the property after his death in the future, so that the estate can be distributed according to the intention of the person concerned, reducing the tax burden, and eliminating future certification procedures. Estate planning is primarily about making a will.

(1) Wills and Distribution

The so-called will is the written will of the parties regarding the disposition of their property after death. Therefore, a person who has made a will can transfer the property according to his wishes during his lifetime. Proper disposal of inheritance. For those who have not made a will, the inheritance distribution will be distributed in order according to the laws of each state: 1. The property owned by the couple belongs to the survivor; 2. The sole or individual property of the deceased (1) The property of a single person with children belongs to the children; (2) ) If a married person has one child, half of the property belongs to the surviving spouse and the other half belongs to the child; (3) If a married person has two or more children, one-third of the property belongs to the widow and two-thirds to the children; (4) If you are married and have no children, half of the property will belong to the survivor and the other half to the parents. If the parents are deceased, then it will be distributed to the other children of the parents such as the brothers and sisters of the deceased; (5) If you are unmarried and have no children, the property will belong to the parents. If the parents are deceased, then the property will be distributed to the parents. to the parents' other children.

(2) Types of Wills

In the United States, anyone over 18 years old and of sound mind can make a will.

1. Handwritten will. It is not important for the testator to write and sign in his own hand and indicate the date. Witnesses are not important. What is important is that the will must clearly state the wishes of how the estate will be handled. Once a handwritten will is altered or appended, the law will not recognize it.

2. Formal will. A formal will usually adopts the format of a legal will. The testator must sign, indicate the date, and explain clearly how the estate will be handled. Generally, it must be witnessed by two or more people.

Although there is a will, if the person who made the will dies, the estate still needs to be certified by the court. If the deceased does not have a will or the will is invalid, he will have to go through the intestacy certification process. The certification process is time-consuming, expensive, and requires publicity, and loses the right to privacy. Therefore, many testators try to use trusts, property ownership, etc. Avoid authentication procedures.

(3) Types and applications of trusts

If one spouse is unwilling to transfer property to a third party other than the couple, and is unwilling to give up each person’s comprehensive inheritance. For gift tax deductions, you can consider setting up a trust and putting 600,000 into the trust, with one spouse as the beneficiary. This 600,000 will be excluded from the total estate. The so-called trust is a way to transfer ownership to a beneficiary using legal methods. There are many types of trusts, including revocable trusts and irrevocable trusts, living trusts and estate trusts, etc. Generally, a living trust is used, that is, it is established according to the will of the trustee during his lifetime. Usually, the trustee has chosen an administrator to manage the trust property. Living trusts are trusts that can be canceled or modified. The trustor has not completely lost control of the property before his death, and can arrange the inheritance according to his lifetime intentions after his death. This kind of trust is the most popular type. An irrevocable trust refers to a trust that cannot be terminated or changed once it is established. If this kind of trust is established properly, the gift tax can be reduced or reduced during the gradual transfer of property, thereby affecting the inheritance tax. However, if the trust belongs to a child under the age of 14, , if the profits generated by the trust exceed 1,200 yuan, the trustee will be taxed at a higher rate. The advantage of a testamentary trust is that it can be stated in the trust that the beneficiary is underage or incapacitated, and the trust administrator can directly manage the property. In addition, if the plan is carried out correctly, the inheritance tax can be reduced and the rights of minors are protected.

4. Property ownership and property rights registration

At present, the most common property ownership in the United States is:

(1) Mutually owned property. In mutual inheritance of property, each owner has an equal proportion of property rights. If one owner dies, the property of the deceased person will be automatically transferred to the other owners without certification.

(2) Own property respectively. Under this kind of property ownership, the transfer from intestate to certified estate must go through certification procedures. The proportion of property owned by different property owners does not have to be equal, but the amount of capital contributed by each person should be equivalent to the ownership ratio, otherwise it may involve gifts or income taxes.

(3) The couple owns property. That is, each has half ownership. If one spouse dies, the property is inherited by the survivor and no inheritance tax is payable on this part. Under the joint property system of husband and wife, all property purchased during the validity period of marriage is the joint property of the husband and wife.

(4) Individual and exclusive property. Property that is unique to an individual is called individual property. Specifically, due to different personal marriage situations, they are divided into unmarried men and women, men and women who have not remarried, married men and women with exclusive property, etc.

5. The Development Trend of the U.S. Estate Tax

The current U.S. President Bush once said when accepting the presidential nomination at the Democratic National Convention: Every family, every farmer and every businessman should be free to bequeath the proceeds of his or her life's hard work to their loved descendants without having to pay estate taxes.

After Bush took office, he began to move towards the goal of abolishing the estate tax. On February 8, 2001, the Bush administration submitted a plan to gradually eliminate the estate tax to Congress; on May 26, the U.S. Senate and House of Representatives finally passed the bill; on June 7, President Bush signed the bill. Thus, the U.S. estate tax reform plan became a formal law and was implemented on January 1, 2002.

The core content of the reform is to increase the pre-tax deduction for inheritance tax and reduce the marginal tax rate year by year starting from 2002, and finally officially abolished this tax in 2010. Regarding this reform, the U.S. Congress initially had two different views. The Democratic Party basically supported it, while the Democratic majority opposed it. After multiple explanations, some Democratic congressmen also changed their attitudes and supported the reform. This was an important reason for the smooth passage of the reform plan. American public opinion also has two opinions: for and against the reform.

The reasons for opposing the reform: First, the inheritance tax is a tax on the rich. Abolishing this tax will affect the tax’s function of regulating income distribution and achieving social justice; second, the inheritance tax is a type of personal income tax. In addition, it can be extended to adjust the generation-skipping transfer of income to avoid dynastic family influence and is conducive to social progress; third, although there are many loopholes in the inheritance tax, it can be made up through reform and there is no need to abolish it; fourth, the income from the inheritance tax has been It has a certain scale and has certain financial significance.

There are three reasons for agreeing with the reform: First, the estate tax is essentially a death tax, and from the perspective of social justice, death should not be taxed; second, the estate tax is essentially a tax on death. Rich people set traps, which is not conducive to capital accumulation; third, there are too many loopholes in inheritance tax. A large number of taxes can be avoided through tax planning. However, collection and management are difficult, and the income scale is small. It only accounts for 1.5% of federal tax revenue, 3.5% of personal income tax, and 3.5% of personal income tax. Not commensurate with the cost.

It is understood that the United States levied an inheritance tax in 1916 and a gift tax in 1930. In 1976, the two taxes were merged and collectively referred to as the inheritance tax. Currently, inheritance tax taxpayers in the United States account for about 2% of the total population, with annual income of only about 30 billion yuan. After this reform, the inheritance tax and gift tax in the United States will gradually be decoupled, and the gift tax will eventually be retained and the inheritance tax will be abolished.