Latest news with #wealthTransfer
Daily Mail
05-07-2025
- Business
- Daily Mail
The traps you MUST avoid to protect your family wealth from inheritance tax - and how to exploit the trick that wealthy families use to slash their bills
Inheritance tax is widely loathed. It's a tax on death, property and the natural desire to pass wealth down the generations. Anxiety among families who already hated the idea of loved-ones getting landed with a hefty 40 per cent bill on inheritances has intensified since last autumn's Budget.
Yahoo
29-06-2025
- Business
- Yahoo
Murphy says he thinks ‘there's a chance' Trump's megabill doesn't pass
Sen. Chris Murphy (D-Conn.) said Sunday he believed 'there's a chance' President Trump's 'big, beautiful bill' will not achieve Senate passage. 'Sen. Murphy, do you think there's any chance that the so-called big, beautiful bill does not pass the Senate?' NBC News's Kristen Welker asked Murphy on 'Meet the Press.' 'I do think there's a chance it doesn't pass. They are trying to ram it through as quickly as they can, likely in the middle of the night tonight, because every day that this bill hangs out there, it becomes less popular,' Murphy replied. 'As you noted, by almost a 2-to-1 margin, the American people hate this piece of legislation, because it's going to represent the biggest transfer of wealth and money from the poor and the middle class to the rich in the history of the country,' he added. Senate Republicans on Saturday narrowly voted to advance a nearly 1,000-page bill to implement Trump's agenda despite opposition from two of their members. Sens. Rand Paul (R-Ky.) and Thom Tillis (R-N.C.) both voted against advancing the package. Paul has opposed a provision to increase the debt limit by $5 trillion, while Tillis has said the bill would cost North Carolina $38.9 billion in federal Medicaid funding. 'I cannot support this bill in its current form. It would result in tens of billions of dollars in lost funding for North Carolina, including our hospitals and rural communities,' Tillis said in a prior statement. 'This will force the state to make painful decisions like eliminating Medicaid coverage for hundreds of thousands in the expansion population, and even reducing critical services for those in the traditional Medicaid population,' he added. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
29-06-2025
- Business
- Yahoo
Social Security and Medicare Are Racing Toward Drastic Cuts—Yet Lawmakers Refuse To Act
Considering recent news, you may have missed that the 2025 trustees reports for Social Security and Medicare are out. Once again, they confirm what we've known for decades: Both programs are barreling straight toward insolvency. The Social Security retirement trust fund and Medicare Hospital Insurance trust fund are each on pace to run dry by 2033. When that happens, seniors will face an automatic 23 percent cut in their Social Security benefits. Medicare will reduce payments to hospitals by 11 percent. These cuts are not theoretical. They're baked into the law. If nothing changes, they will be made. I have nothing against cuts of this size. In fact, if it were up to me, I would cut deeper. Medicare is a terrible source of distortions for our convoluted health care market and needs to be reined in. Social Security was created back when being too old to work meant being poor. That's no longer the case for as many people. Thanks to decades of compound investment growth, widespread homeownership, and rising asset values, seniors are no longer the systematically vulnerable group they once were. The top income quintile includes a growing number of retirees who draw substantial incomes from pensions and investment portfolios with Social Security benefits layered on top. These programs have become a transfer of wealth from the relatively poor to the relatively wealthy and old. Of course, America still has some poor seniors, so cutting across the board is bad. This is why the cuts should be targeted, not the automatic effects in 2033. And Congress should get started now. The size of the problem is staggering. Social Security's shortfall now equals 3.82 percent of taxable payroll or roughly 22 percent of scheduled benefit obligations. Avoiding insolvency eight years from now would require an immediate 27 percent benefit cut, according to former Social Security and Medicare trustee Charles Blahous. Alternatively, legislators could raise the payroll tax from 12.4 percent to 16.05 percent. That's a 29.4 percent increase. Or they could restructure Social Security so that only people who need the money would receive payments. But because facing this problem in an honest way is politically toxic, legislators are ignoring it. Blame does not rest solely with Congress. The American public has made it abundantly clear that they don't want reforms. They don't want benefit cuts or tax increases, and they certainly don't want higher retirement ages. So politicians pretend everything is fine. Congress does deserve fresh criticism for making things worse. Last year, legislators passed the misnamed "Social Security Fairness Act," giving windfall benefits to government workers who didn't pay into the system—which enlarges the shortfall. This year, the House proposed expanded tax breaks for seniors in the "One Big Beautiful Bill Act," which would further worsen the problem. The cost of political giveaways is steep. Social Security's 75-year unfunded obligation has now reached $28 trillion, up from $25 trillion just a year ago. Medicare is no better. Its costs are projected to rise from 3.8 percent of gross domestic product today to 6.7 percent by the end of the century (8.8 percent under more realistic assumptions). Most of the additional spending will be financed through general revenue, meaning more borrowing and more pressure on the federal budget. As Romina Boccia of the Cato Institute has documented, other countries have taken meaningful steps to address similar challenges. Sweden and Germany implemented automatic stabilizers that slow benefit growth or raise taxes when their systems become unsustainable. New Zealand and Canada have moved toward more modest, poverty-focused pension systems that offer basic support without bankrupting the state. A few weeks ago, Denmark increased the retirement age to 70. These are serious reforms. The U.S. has done nothing. Options exist. Policymakers could gradually raise the retirement age to reflect modern, healthier, longer lives. They could cap benefits at $2,050 monthly, preserving income for the bottom 50 percent of beneficiaries while progressively reducing benefits for the top half. They could reform the tax treatment of retirement income to encourage private savings, as Canada has done with its tax-free savings accounts. Any combination of these reforms would help. But that would require admitting that the current path is unsustainable. It would require telling voters the truth. It would require courage. So far, these admirable traits have been sorely lacking in our politicians. The programs' trustees have made the stakes clear: The only alternatives to reform will be drastic benefit cuts or massive tax hikes. Waiting until the trust funds are empty will leave no room for gradual, targeted solutions. It will force crisis-mode slashing that will hurt the most vulnerable. The ultimate blame is with voters who continue to reward politicians for promising the impossible. A functioning democracy cannot survive if the electorate insists on voting benefits for themselves to the point of insolvency. At some point, reality asserts itself. That moment is rapidly approaching. COPYRIGHT 2025 The post Social Security and Medicare Are Racing Toward Drastic Cuts—Yet Lawmakers Refuse To Act appeared first on
Irish Times
24-06-2025
- Business
- Irish Times
The D4 farmers: How the rich are buying up land to avoid inheritance tax
In west Cork , there has been an influx of rich Dublin buyers in the area of late. 'It is a notable trend,' local agent Maeve McCarthy, of Charles McCarthy Estate Agents in Skibbereen, says. But, rather than seek out a site with a view, or a beachfront holiday home, these buyers are coming with one purpose in mind – to reduce the inheritance tax their family will have to pay. 'High net worth families are purchasing agricultural land as a means of transferring wealth in a tax-efficient manner,' she says. It's the latest wheeze dreamt up by tax advisers to help rich families reduce tax bills when passing on assets to the next generation. READ MORE Availing of agricultural relief can mean a 90 per cent reduction in the taxable value of the asset. And not only that, but if the land is leased, subject to certain conditions, rental income can also be tax free. While the Government has become wise to the unforeseen use of the relief, more restrictive measures announced in last October's budget have yet to come into play. Non-farming families still have time to make use of the relief before the changes are legislated for. While restrictions might be warranted, long-time farmers are now struggling to make sense of the new regime and how it might hinder them from availing of the relief. Tax relief While inheritance tax thresholds apply for most Irish families, allowing assets worth up to €400,000 to be passed on tax free to each child, a different regime applies to the transfer of assets such as businesses and farms. These are attractive, as the goal is to keep the assets intact rather than forcing the recipients to sell off land – for example, to settle a tax bill. Through agricultural relief, the taxable value of such property and land can fall by as much as 90 per cent. [ Kinsale flotilla set to protest 23-hectare mussel farm Opens in new window ] 'It's a very important relief to have in place. Without that in place, tax-free thresholds wouldn't be sufficient [to keep farms intact],' says Kevin Connolly, financial management specialist with Teagasc . McCarthy agrees that 'it's a tax-efficient way of passing on the land', giving an example of a farmholding of 100 acres. With current values of about €20,000 an acre for good land in the area, this farm could be worth about €1 million. If it qualifies for agricultural relief, its taxable value would be as low as €100,000. Qualifying for the relief does require meeting certain tests. First of all, the beneficiary must be an active farmer and have farmed the land for at least six years at the date of the gift or inheritance. However, this requirement can be overcome by leasing out the land to an active farmer. Secondly, after the gift or inheritance is received by the beneficiary, at least 80 per cent of the total property value of their assets must constitute agricultural property. Relief on income tax from leasing a farm is also attractive. For example, for a lease held for between five and seven years, income of up to €18,000 a year will be exempt from income tax. This increases to €40,000 a year for leases of 15 years and more. Tax planning As McCarthy notes, while the relief is 'commendable', given its aim of helping farmers keep farms within families and allowing them to transfer from parent to child in a tax-efficient manner, its use is not always in the spirit of the relief. 'It's an unintended consequence of good intentions,' she says. 'It has been a concern over a good number of years,' agrees Connolly. 'Wealthy non-farmers would potentially see land as a way of passing on wealth to the next generation.' Tax advisory firm Warren and Partners, for example, states on its website that the 'relief can be utilised very efficiently as part of a wider inheritance tax planning exercise'. Figures from Revenue show that 1,781 taxpayers made a claim for Capital Acquisitions Tax (CAT) agricultural relief in 2023 (the latest figures available) at a cost to the exchequer of €246.6 million. This is up substantially – by 55 per cent on a value basis – from 2019 when 1,413 claims were made, at a value of €158.6 million. 'Having non-farmers coming in and buying land for wealth transfers doesn't do any favours for the farming community,' says Connolly. [ Scientists accuse Ireland of 'accounting trick' to justify livestock emissions Opens in new window ] It's one reason why land prices are increasing. 'They [high net worth individuals] are starting to have an impact on prices,' says McCarthy, noting that local and younger farmers are being priced out of the area. 'They [local farmers] will lease the land but will never end up owning it,' she says, adding that rental values have also increased substantially in the last 12 months. According to the 2025 Teagasc/Society of Chartered Surveyors Ireland Agricultural Land Market Review and Outlook Report, average land rental prices are expected to increase by 7 per cent in 2025. In Munster, average rental prices are expected to rise by 8 per cent. The role of investors is one reason cited for rising land values. While there is a risk in buying land for CAT reasons – will it appreciate in value, or can it be leased? – Connolly says demand for agricultural land is high, particularly in areas where dairying is quite strong. 'It's the most profitable enterprise at the moment,' says Connolly. 'If land comes up for long-term lease near a dairy farm, you will have interest in it.' Clampdown In last October's budget, then minister for finance Jack Chambers tightened eligibility for use of the regime to 'safeguard agricultural relief for the genuine active farmer and the next generation of farmers'. Noting that the relief 'is an important measure to allow our young people to pursue their lives on the family farm', the minister said 'agricultural land has increased in value above inflation, and it is difficult for genuine farmers to purchase the land they need for farming'. To address issues of the relief being used 'as part of tax planning strategies by wealthy individuals', Mr Chambers said he would extend the six-year active farmer test to the person who provides the gift or inheritance. This means that it's not just the person inheriting the land who will have to pass the active farmer's test, the person gifting it will have to too. The person gifting the land will now have to show that they either have an agricultural qualification and have farmed the property on a commercial basis; or they have spent 50 per cent of their normal working time farming; or they have leased the land to someone who fulfils these requirements; or they have combined farming with leasing. The change is expected to yield about €15 million on a full-year basis. The regime has been tightened previously: for example, cash gifts, used to purchase farm land within two years, would have qualified for relief at one time, but this no longer applies. Similarly, the lease exemption was tightened in the 2023 budget. You can no longer buy a farm and lease it immediately. You have to wait seven years before you can claim the tax-free income, although there are exemptions. However, the commencement order required for these changes to take effect has yet to be announced. Impact on farmers In the meantime, farmers are left struggling with the uncertainty that now surrounds the relief. 'What was proposed caught people unawares in the farming community,' says Connolly, adding that the budget measures are 'quite a blunt instrument'. 'There are some angles to it that would catch out a genuine farm transfer.' Marty Murphy, head of tax with Irish Fiscal Advisory Council (Ifac) , has counted 15 scenarios that could negatively impact farmers, including where life interests apply and where there is no formal lease. He gives the example of a farmer who also works as a schoolteacher, and thus doesn't meet the 20 hours a week farming requirement, and the tax bill that can arise. [ More than 20 Irish companies on Asian trade mission Opens in new window ] Another issue is where a farmer has to go into a nursing home at short notice and there isn't time to agree a lease. The farmer may not fulfil the requirement for six years' active farming immediately ahead of transfer. Farmers are now hoping the budget measures will be changed before they become law, to ensure their interests are protected. Murphy doesn't expect any change until this October's budget, but adds that rushing to get in ahead of any changes is not always practical. 'Succession is not something you can do over an afternoon coffee,' says Murphy. 'It's a very sensitive topic, and you need to have a very well co-ordinated plan.' Nonetheless, for those who have been planning to get a succession plan in motion, his advice is: 'Don't delay, get transferring as quick as possible.' The fear remains that, when introduced, the new regime will 'inadvertently catch genuine farm transfers in the net', says Connolly. A spokeswoman for the Department of Finance says consultation and engagement with farmers and stakeholders 'to ensure that there are no unintended consequences in relation to these measures' is ongoing. But will the changes still do what was originally planned? High net worth people have very good advisers – and very good advisers usually find ways around these things, says Connolly.
RNZ News
24-06-2025
- Business
- RNZ News
Ageing farm, orchard owners need succession to protect $150bn of assets
Farm succession is a hot topic at the Primary Industries NZ Summit in Ōtautahi. Photo: RNZ/Monique Steele Farm or orchard owners - especially those approaching retirement age - are being urged to prepare for farm succession as a massive transfer of land and wealth looms. A new report by Rabobank, Changing of the Guard showed more than half of New Zealand's approximately 17,320 farm and orchard owners will reach the pension age of 65 in the next decade. It found that based off land values, agriculture and horticulture will need to prepare to manage the largest-ever intergenerational transfer of wealth, with farm assets estimated to be worth $150 billion. Farm succession was a hot topic on day one of the Primary Industries New Zealand Summit in Ōtautahi on Tuesday, which coincided with the release of the report. Agriculture Minister Todd McClay also spoke to the hundreds of guests, in addition to other industry experts. Rabobank chief executive Todd Charteris told the summit that economic, environmental and emotional were the drivers behind farm succession, including risks of disconnect between generations and the realities of servicing debt. "Succession is not a moment in time - it's a process that takes years of planning, conversation and adaptation," Charteris said. "The traditional model of passing the farm to the next generation is under pressure." The report surveyed 450 farmers and found only a third had a formal succession plan in place. A further half of the respondents had not discussed farm succession nor started a plan, whereas 17 percent had discussed it, it found. It also showed while a third of farmers intended to pass the farm onto their children, 39 percent of them reported having no children seriously interested in farming. Charteris said the findings highlighted the extent of the succession challenge ahead for the agricultural sector. "We also found that the financial obstacles aren't getting any smaller to farm ownership and transferring of that," he said. "But if anything, what we've seen is that may have plateaued over those years." Charteris said there were new and innovative models emerging that could help families stay connected to their land, like a partial sale, turning ownership to iwi or whanau, or engaging private capital. The Templeton family of coastal Southland had undertaken its own farm succession plan, with the sons taking up much of the dairy farming business as fifth-generation. Speaking at a panel discussion in Christchurch, Peter Templeton - also a Nuttfield scholar - said farm succession could be a difficult process, but those interested should be radically transparent with family members. "Succession is a 10 to 15-year process, so start when you've still got some energy left, don't start late," Templeton said. "If you're on a family farm, talk about the farm outside of the individual people. So, 'how does the farm work for the families?' I think is quite a good way of looking at it." Skye Macdonald of 16,000 hectare high country sheep farm Middlehurst Station in Marlborough's Awatere Valley shared the farm workload with her three other siblings, as parents Willy and Sue looked to the future. Macdonald said succession was hard work, but many lessons had been learned along the way. She said keeping the family and station legacy going was crucial. "Succession doesn't really ever stop, does it? It just keeps on going down the down the line and if you work hard and be open about it, just keep going with it," she said. The report also found while a third of farmers intended to pass the farm on to their children, just below 40 percent reported having no children seriously interested in farming. The Primary Industries New Zealand Summit will continue into Wednesday. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
