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1. 55-year-old Don is diagnosed with Glioblastoma Multiforme, a deadly brain tumor to which the majority of sufferers succumb to within 12 - 18 months. Don has a Visa with a $50,000 credit line and a Mastercard with a $25,000 credit line. After transferring all his savings and house into his children's name, he takes a one-way flight to a small Pacific island, and lives large, dining at an exclusive restaurant almost daily, drinking the finest in Port, etc., never intending to pay back the credit card debt. He has a cabin built on the beach with a cash advance from his Visa and lives there for the rest of his shortened life. The $75,000 in credit card debt never gets repaid.
2. 28-year-old Ryan qualified for a $10,000 American Express. He also qualified for a worker's visa to Denmark. He spends the $10,000 on two weeks of profligate clubbing, drinking, and strippers before flying to Denmark. His debt is never repaid.
Do you think the individuals above acted ethically or not?
1. 55-year-old Don is diagnosed with Glioblastoma Multiforme, a deadly brain tumor to which the majority of sufferers succumb to within 12 - 18 months. Don has a Visa with a $50,000 credit line and a Mastercard with a $25,000 credit line. After transferring all his savings and house into his children's name, he takes a one-way flight to a small Pacific island, and lives large, dining at an exclusive restaurant almost daily, drinking the finest in Port, etc., never intending to pay back the credit card debt. He has a cabin built on the beach with a cash advance from his Visa and lives there for the rest of his shortened life. The $75,000 in credit card debt never gets repaid.
2. 28-year-old Ryan qualified for a $10,000 American Express. He also qualified for a worker's visa to Denmark. He spends the $10,000 on two weeks of profligate clubbing, drinking, and strippers before flying to Denmark. His debt is never repaid.
Do you think the individuals above acted ethically or not?
The answer should be obvious to you. Of course neither is ethical. In story number 1, I feel bad for the guy. Number 2 is just a flat out crook. However, both of them are still unethical people.
.....and, the IRS would go back and discover he transferred his assets to avoid taxes and bills, and they would take the money from his relatives he signed the money over too. They have heard every little trick you think you invented. They aren't stupid...
.....and, the IRS would go back and discover he transferred his assets to avoid taxes and bills, and they would take the money from his relatives he signed the money over too. They have heard every little trick you think you invented. They aren't stupid...
Okay. Let's say he transferred his home (worth $100,000), his car (worth $10,000), and his life savings (worth $30,000), equally distributing them among his five children. His children sell the house and use it primarily to pay off debts and take vacations, including to visit him. Likewise, they sell his car and split it equally among themselves and use it for similar purposes. They also each take their $6,000 share of his savings and bury it under the ground or hide it beneath their bed. They do not know of his plans, although a few of them have a faint suspicion. Then how will the IRS go after them?
Okay. Let's say he transferred his home (worth $100,000), his car (worth $10,000), and his life savings (worth $30,000), equally distributing them among his five children. His children sell the house and use it primarily to pay off debts and take vacations, including to visit him. Likewise, they sell his car and split it equally among themselves and use it for similar purposes. They also each take their $6,000 share of his savings and bury it under the ground or hide it beneath their bed. They do not know of his plans, although a few of them have a faint suspicion. Then how will the IRS go after them?
Read the tax rules.
The max per year you can donate is $13,000 per family member per year, it's not unlimited. Incidents where one donates 5 years of "Tax Free" transfers at once (which is possible normally) after getting a death sentence has never flown father then a judges bench before ruling for the IRS. It's pretty classic tax fraud.
That is pretty easy to go after from filings from the executor and the families tax returns, they go through with a fine toothed comb when no third parties are involved, and tax fraud just gets your 5 kids into federal pound-you-in-the-rear prison. Great way to care for the grandkids from there, assuming the spouse didn't know and can keep them.
When the father gives his assets away it is an illegitimate move... that means that his creditors can get it back or its monetary value from whoever received the asset... its called fraud... but you have to realize the only losers in that game are the shareholders who "front" the money to the banks to lend it to the guy... so yes its unethical... the banks don't lose out... other people... you see the banks are clever enough to put you with all the risks but at the same time they get a large share from all the profits... nice of them, huh...
per OP
ethical?no. he did not and the debt is going to go to his kids.
the american fantasy love affair with debt is going to come to a rude awakening.
Last edited by Huckleberry3911948; 12-27-2009 at 03:56 PM..
If he sets up his estate correctly there will be no tax burden to the heirs. His action to max out credit cards and he happens to die - who knows he committed fraud? You or I could go on holiday and max out our cards and die while on vacation. While the former was premeditated but who really knows for sure? It could be assumed things in life happen. Sure it's unethical but isn't it like the tree that falls in the forest - did it make a noise?
If he sets up his estate correctly there will be no tax burden to the heirs. His action to max out credit cards and he happens to die - who knows he committed fraud? You or I could go on holiday and max out our cards and die while on vacation. While the former was premeditated but who really knows for sure? It could be assumed things in life happen. Sure it's unethical but isn't it like the tree that falls in the forest - did it make a noise?
i respectfully disagree. all debt and assets pass to the heirs.
the fact that it is not secured by property does not matter.
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