Estate taxes and the top 1 percent by net worth
Of course, you've already realized that some of that is that smaller estates are more common than larger estates.  But it seems unlikely that there are four times as many estates between $10 and $11 million as above that range.   People who expect to die with an estate subject to inheritance tax tend to prepare.   I don't know how common it is, but if the surviving member of a couple remarries, then the new spouse gets a separate exemption.  And of course spouses inherit from spouses without tax.  In theory this could last indefinitely.  In practice, it is less likely.  But if a married couple has $20 million, the first spouse could leave $15 million to the second and $5 million to other heirs.  The second spouse could leave $10 million to a third spouse (after remarrying) and another $5 million to children with the first spouse.  All without triggering the estate tax.   People can put some of their estate into a trust.  This can allow the heirs to continue to control the money while not paying inheritance tax.  Supposedly Ford (of Ford Motor Company) took that route.   Another common strategy is to give the maximum without gift tax each year.  That's at least $14k per donor and recipient per year.  So a married couple with two kids can transfer $56k per year.  Plus $56k for the kids' spouses.  And if there are four grandchildren, that's another $112k.  Great-grandchildren count too.  That's more than a million every five years.  So given ten years to prepare, parents can transfer $2 million out of the estate and to the heirs without tax.   Consider the case of two wealthy siblings.  They've each maxed out their gifts to their own heirs.  So they agree to max out their gifts to their sibling's heirs.  This effectively doubles the transfer amount without tax implication.   Also realize that they can pretransfer assets at the current market rate.  So if a rich person has an asset that is currently undervalued, it may make sense to transfer it immediately as a gift.  This will use up some of the estate exemption.  But if you're going to transfer the asset eventually, you might as well do so when the value is optimal for your purpose.   These are just the easy things to do.  If someone wants, they can do more complicated things that make it harder for the IRS to track value.   For example, the Bezos family invested in Amazon.com when Jeff Bezos was starting it.  As a result, his company could survive capital losses that another company might not.  The effect of this was to make him fabulously rich and his parents richer than they were.  But he won't pay inheritance tax until his parents actually transfer the estate to him (and I believe they actually put it in a charitable trust).  If his company had failed instead, he still would have been supported by the capital provided by his parents while it was open (e.g. his salary).  But he wouldn't have paid inheritance tax on it.   There are other examples of the same pattern:  Fred Smith of FedEx; Donald Trump; Bill Gates of Microsoft; etc.  The prime value of the estate was not in its transfer, but in working together while alive or through a family trust.  The child's company became much more valuable as a result of a parent's wealth.  And in two of those examples, the child was so successful that the parent became richer as a result.  So the parent's estate does count.  Meanwhile, another company might fail, leaving the estate below the threshold despite a great deal of parental support.   And those aren't even fiddles.  Those children started real companies and offered their parents real investment opportunities.  A family that wants to do so can do a lot more with arrangements.  Of course, the IRS may be looking for some of them.   The point being that the estate might be more than $11 million earlier, but the parents can find ways to reduce it below the inheritance tax exemption by the time that they die. There are two main reasons for the difference between these two numbers: While there are a few people that are wildly wealthy, most of the people with more than 10 million have between 10-50 million dollars.  These people shield most of their estate and in the end the tax only effects a small portion of even the wealthy. There are two key reasons: Consider a family of four, two kids and two adults, that has a net worth of $20 million. Each of these four people live in a top 1% household. But any of those four people can die, and their estate will not pay any estate tax. Both kids and one spouse can die, and still no estate tax will be paid. Only when the last spouse dies would there be any estate tax. Also, consider a person who dies but whose assets do not flow into their estate. For example, their assets could be held in an inter-vivos trust. People with higher net worths are much more likely to use trusts to avoid or minimize estate taxes. Data is a funny thing. There are many different ways of constructing data sets. Keep in mind, the cite you linked is fine, I follow this kind of site when I am data mining. They got their data from the Government, and there's no reason to doubt its validity. Keep in mind, it's a survey. They extrapolate from a survey of a small population - In the 2016 survey, 6,254 families were interviewed, and in the 2013   survey, 6,026 were interviewed. 1) Let's set that aside, and look at the numbers as if they were gospel. $10.37M net worth to be top 1%. That's people at all different ages, and not the wealth cutoff for those dying, else the estate tax would hit closer to the 1%. Given the limited data set, I'd only hypothesize, if we graphed the age (along the bottom, X axis) vs number of people, the curve would peek in mid to late 60's, as people retire. With 20 years for the couple to spend and gift, it's not tough to imagine that by the time they pass away, the taxable estate $11M couple falls to just .2%.  2) When the estate tax impacted estates over just $600K, and my daughter was born, we set up a trust. Out net worth was barely positive, but insurance alone would have created enough wealth to have our orphaned child be subject to the tax of our estate before she received a dime. We also used the trust to fund her college. As a completed gift, had we made some bad decisions and lost it all, at least that money would be protected. Keep in mind, there are different flavors of trusts, but it's safe to say that in a survey to collect data, the million dollar+ trusts are considered family wealth. Not tough to imagine a good fraction of those families over $10M have a nice chunk already protected this way.  3) Last - For any illiquid assets, there's a discount that gets applied, typically 30%. I own a ranch, and want to start gifting it to the kids, the process involves creating stock, with restrictions, as a way to transfer the fractions required to gift the $14K/yr per person combination. (That is, a couple can gift 14x4 = $56K to a child with a spouse. 4 kids, all married, and the gifting is $224K/yr, $320K at full valuation. Again, these gifts may be to irrevocable trusts, and still thought of as their wealth.
I have inherited property worth close to 1 million US Dollars. 1 Million USD is a large amount considering Bangladesh. Around 80 Million Taka; making someone with this amount amongst the high net worth individual. Check if this is not a scam as indicated in comments.  What is the proper procedure for him to send me the money to US? As per Bangladesh Foreign Exchange Regulation Act; there are limitations to transfer of funds outside of Bangladesh. Read the detail guideline, section 11 Private Remittance is relevant. However your specific case is not detailed. A professional help is advised as there would be paperwork required. What are our legal and tax obligations? Tax obligations in US, as indicated by Michael in his answer. "**What you need to know about [estate planning](http://money.cnn.com/magazines/moneymag/money101/lesson21/), including why you may need a will and assigning a power of attorney.**  **1. No matter your net worth, it's important to have a basic estate plan in place.**  Such a plan ensures that your family and financial goals are met after you die.  **2. An estate plan has several elements.**  They include: a will; assignment of power of attorney; and a living will or health-care proxy (medical power of attorney). For some people, a trust may also make sense. When putting together a plan, you must be mindful of both [federal and state laws](http://corlisslawgroup.com/) governing estates.  **3. Taking inventory of your assets is a good place to start.**  Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. Ask yourself three questions: Whom do you want to inherit your assets? Whom do you want handling your financial affairs if you're ever incapacitated? Whom do you want making medical decisions for you if you become unable to make them for yourself?  **4. Everybody needs a will.**  A will tells the world exactly where you want your assets distributed when you die. It's also the best place to name guardians for your children. Dying without a will -- also known as dying ""intestate"" -- can be costly to your heirs and leaves you no say over who gets your assets. Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die.  **5. Trusts aren't just for the wealthy.**  Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes and to distribute assets to your heirs without the cost, delay and publicity of probate court, which administers wills. Some also offer greater protection of your assets from creditors and lawsuits.  **6. Discussing your estate plans with your heirs may prevent disputes or confusion.**  Inheritance can be a loaded issue. By being clear about your intentions, you help dispel potential conflicts after you're gone.  **7. The federal estate tax exemption -- the amount you may leave to heirs free of federal tax -- is now set permanently at $5 million indexed for inflation.**  In 2013, estates under $5.25 million are exempt from the tax. Amounts above that are taxed up to a top rate of 40%.  **8. You may leave an unlimited amount of money to your spouse tax-free, but this isn't always the best tactic.**  By leaving all your assets to your spouse, you don't use your estate tax exemption and instead increase your surviving spouse's taxable estate. That means your children are likely to pay more in estate taxes if your spouse leaves them the money when he or she dies. Plus, it defers the tough decisions about the distribution of your assets until your spouse's death.  **9. There are two easy ways to give gifts tax-free and reduce your estate.**  You may give up to $14,000 a year to an individual (or $28,000 if you're married and giving the gift with your spouse). You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred.  **10. There are ways to give charitable gifts that keep on giving.**  If you donate to a charitable gift fund or community foundation, your investment grows tax-free and you can select the charities to which contributions are given both before and after you die." "This is the best tl;dr I could make, [original](https://www.ips-dc.org/report-corporate-tax-cuts-boost-ceo-pay-not-jobs/) reduced by 87%. (I'm a bot) ***** &gt; Job-cutting firms spent tax savings on buybacks, which inflated CEO pay.  &gt; The telecommunications giant managed to get away with an effective tax rate of just 8.1 percent over the 2008-2015 period, while cutting more jobs than any other firm in our sample.  &gt; Through extensive use of overseas tax havens, General Electric achieved a negative effective tax rate during the 2008-2015 period, meaning the firm got more back from Uncle Sam than it paid into federal coffers.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6x0arp/corporate_tax_cuts_boost_ceo_pay_not_jobs/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~201277 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **firm**^#1 **percent**^#2 **CEO**^#3 **tax**^#4 **more**^#5" yes.   you can take out 500,000 form your paid of house.  you pay back 500,000 at 3.5. percent.       you do get a tax break for not owning your house.  it is less then 3.5 you are paying back the back. about one forth of that, BUT you take the 500,000 in invest.   Now cd low 1 percent,  stock is risky.    You can do REIT, with are about 8 to 12  every year. so even at 8 - tax 1.5 is 6.5 - 3.5 bank loan.  that   3 percent on your 500,000 thousand, plus tax break, but that only at 8 percent.      or 500,000 and buy a apartment building, again about 7 to 10 percent,   so that 2 to 3 percent profit, but the building goes up over years. I know that if you make more, you pay more, but do those who have   more, not make more, pay higher income tax? In general, no. In most locales, income tax is based on income, not on wealth. I am retired. I have little income but a fair amount of wealth. I play very little income tax. (But I do pay other kinds of taxes.) Here's a scenario. 2 people of average wealth with similar situations   have the same job with equal pay. After 5 years, their situations   haven't changed and they still earn equal pay, but now one has $40,000   in their account and the other $9,000. Does one now pay higher income   tax because he has more in his account or does he pay the same because   he makes the same? In most locales, you pay income tax on everything that is counted as income. Your salary is income. In some cases, earned interest is income.  But aside from the earned interest from your bank accounts, neither the $40,000 nor the $9,000 is income. Your huge mansion isn't income. Your expensive car isn't income. The huge amount of land you own isn't income. The pricey artwork on your walls isn't income. You don't pay income tax on any of these, but your local may impose other taxes on these (such as property tax, etc.) [Note: consult the tax laws of your specific locale if you want to know details.] Net worth is interesting as it can have a different number assigned depending on your intent.  The number I focus on is my total retirement account and any brokerage account. I purposely exclude the value of my house.* This tells me how much I'm able to invest. My heir would look at it a bit differently. She'd have the cash not only from the house, but from every bit of our possessions that can be sold. For my own purposes, knowing I have a piece of art that might sell for $xxx doesn't mean much, except for insurance purposes. In your case, if the coins are gold, and held for investment, count them. If they were your grandfather's and you plan to leave them to your own grandkids, I'd leave them out.  * I make this point for two reasons - as someone with an eye toward retirement, the house doesn't get included in the 4% return math that I apply to the retirement and stock accounts. Also, in our situation, even when we downsize at retirement, the move isn't likely to pull much cash out of the house, it will be a lateral move. For those who plan to move from a McMansion in the suburbs of NY or Boston to a modest home in a lower cost of living elsewhere, that difference may be very important, and should be taken into account. This is simply how we handle this. You need to keep in mind that there's an exemption amount of more than $5M (five million) dollars for estate tax. Unless you used all of it for gifts during your life time, it will more than cover all of your $70K estate, so there's no need in any additional planning. As to Roth vs Traditional IRA - if you want to leave something to your siblings, leave them the Roth. Why would you give the taxable income to your siblings when you can give them the nontaxable one? Charities are tax exempt anyway. In 2015 there's a $5.43M (That's million, as in 6 zeros) estate exemption. Even though it's $14K per year with no paperwork required, if you go over this, a bit of paperwork will let you tap your lifetime exemption. There's no tax consequence from this.  The Applicable Federal Rate is the minimum rate that must be charged for this to be considered a loan and not a gift. DJ's answer is correct, otherwise, and is worth knowing as there are circumstances where the strategy is applicable. If the OP were a high net worth client trying to save his estate tax exemption, this (Dj's) strategy works just fine.