The Bright Coast

Progressive Thoughts from San Diego Alums on Law, Politics, and Culture

Archive for the ‘Taxes’ Category

The RAP strikes again!

Posted by brightcoast on May 10, 2011

aka The Rule Against Perpetuities aka the biggest pain in the ass Real Property Law has to offer.

The Rule states, “No interest is good unless it must vest, if at all, not later than twenty-one years after the death of some life in being at the creation of the interest.”

Here is the link to the article detailing (well not much detailing) how Mr. Wellington R. Burt made it so that the vast majority of his fortune would not be distributed to his children, or even grandchildren, but rather 21 years after the death of the last grandchild. Here’s where the issue may lie. Although there is the possibility that this is the good ‘ole class gift subject to open, I can’t help but wonder whether for RAP purposes, the last grandchild would have to be a life in being at the time the will was created, which is technically impossible.  Perhaps only a grandchild had to be a life in being at the time the will was created, thus validating the binding nature of the lack of distribution until after the last grandchild’s death + 21 years. (The language is eerily similar to the rule itself, presumably on purpose, so as to avoid invalidation via the RAP).

Perhaps more interesting though, is the fact that this is a featured news story on Yahoo News’s front page, which suggests that non-lawyers are actually remotely interested in reading about the types of stories that lead to confusing legal principles that still linger though most of the dynastic wealth/dead hand control is nowhere near what it used to be. (Think feudalism).

It’s further intriguing to ponder what estate tax will apply to the corpus of someone’s estate who died in 1919, but was/is not distributed until 2011.

Posted in CA Bar Exam, Taxes, The Law | Tagged: , , , , , , , , | Leave a Comment »

Drastic Proposals for Deficit Reduction

Posted by brightcoast on November 11, 2010

Article here regarding some drastic proposals to close the $3.8 trillion deficit gap. These include raising the retirement age to 69 over time (perhaps not unheard of for those of us in the legal profession), and introducing a flat, albeit lower, tax rate, whilst simultaneously eliminating any deductions–hence no more mortgage interest payment deductions.

While this may sound shocking, it seems an answer to the constant debate regarding tax law reform on how to simplify the annual hassle of filing taxes. This way although certain behaviors are not being incentivized, and certain individuals may no doubt lose out, it is a no brainer, you fall into one of the three categories. This is probably music to the ears of Federal Income Tax I students.

On raising the retirement, I think the outcome of this policy would result in Americans taking a long hard look at their spending habits, and would force many people to prepare for their retirement. For example, if you know that you want to retire at age 65, but the feds will not support you via Social Security until the age of 69, there is a 4 year period you will have to save up for. This author personally feels that the inadvertent and inevitable consequence of all of the well intentioned FDR support programs is that Americans have come to rely on the government, rather than themselves, and it needn’t be that way. It is perhaps for this reason that we have gotten into this mess. Social Security is definitely something that shouldn’t be done away with entirely, the need must be there to justify the continued implementation, but with the recent mortgage crisis, our country has to bounce back from the credit spending mentality, and focus on what is truly important: that which money (or credit) cannot buy.

Posted in Americana, Federal Deficit, Internal Revenue Code, Politics, Social Security, Taxes, U.S. Statutes | Leave a Comment »