In 1916, Congress tried again: The new tax had a top rate of 10% on estates over $5 million (something like $100 million these days). This estate tax is with us still, though in much altered form.
When the 1916 tax was introduced, Connecticut insurance man Charles Ives saw an immediate opportunity:
[L]aying the foundation of the modern practice of estate planning. Ives published Life Insurance with Relation to Inheritance Tax in 1918, the Bible of estate planning at the time.You probably know Charles Ives from his moonlighting as a Pulitzer-prize-winning composer.
Charles Ives, 1913
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2 comments:
This post is too short & didn't clarify the points. Does the author mean to say that trust & estate planning came as a mean to evade taxes.
Nope, no one advocates tax evasion.
On the other hand, everyone is entitled to arrange their financial affairs so as to limit or control their tax liability. We don't begrudge Warren Buffett's mountain of tax-free income, which he gets because he has chosen to invest in tax-free municipal bonds instead of taxable corporate issues, for example.
Ives recognized that the estate tax was built upon a series of assumptions about how people manage their affairs, and that through sound estate planning they could make other arrangements that would legally reduce the taxes imposed when they passed wealth to the next generation.
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