Deborah Jacobs, who writes about personal finance for baby boomers at Forbes.com, says she is wagering all her Apple stock that the estate of Steve Jobs will not owe the IRS a penny of estate tax.
Steve Jobs, placed at least three properties owned by him and his wife into trusts in 2009 and legal experts are speculating the move may have been made to keep his assets from being disclosed upon his death, according to a Reuters article.
By placing real estate and other assets into a trust, one can keep them from being publicly disclosed during probate as well as minimize estate taxes. If it is done correctly, both those goals can be accomplished. If it is a Private Asset Trust, placing the assets into the trust can also protect them from creditors.
Reuters reports that Jobs and his wife co-owned their Palo Alto home as well as two other properties in nearby Woodside. These properties were transferred to two different trusts in March of 2009, two months following Jobs’ second medical leave of absence from Apple.
In addition to his holdings in Apple, Jobs received 138 million shares of Disney stock when he sold Pixar to Disney in 2006.
Steve Jobs Estate Worth About 7 Billion
Since he died worth an estimated $7 billion, some people may find that surprising. But, as Jacobs notes, for estate planners “it’s all in a day’s work”. She hypothesizes in a post this week that some of the estate planning tools Jobs may have employed include:
Due to the unlimited marital deduction, assets that pass to a spouse (who must be a U.S. citizen) carry no estate tax. Jobs could have left everything outright to his wife, or put their assets into a marital trust.
Gifts to charity
While Jobs was never known for his charitable nature – he famously shut down the Apple Foundation upon his return to the company – he may have given gifts anonymously in a way that would provide estate planning benefits.
Jobs could transfer up to $5 million tax-free to his wife. Portability allows her to utilize any of his unused exclusion amount, meaning she could transfer up to $10 million tax free.
Jobs may have been advised to put his $5 million generation-skipping transfer tax exemption into a bypass trust, to pass to his grandchildren and subsequent generations free of the GST tax.
It is possible that Jobs, knowing he had a reduced life expectancy, set up a series of grantor retained annuity trusts with different terms as a hedge against the mortality risk – if you die during a GRAT term, a portion of the trust is included in your estate.
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