How the Clintons Reduce Estate Tax Pinch... Legally

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June 17 (Bloomberg) -- Bill and Hillary Clinton have long supported an estate tax to prevent the U.S. from being dominated by inherited wealth. That doesn’t mean they want to pay it. Bloomberg’s Richard Rubin and Al Hunt speak on Bloomberg Television's “Market Makers.” (Source: Bloomberg)

Are using what is known as a residence trust.

They took their home in westchester, new york, divided into two parts and put each half into the trust.

They set the trust aside.

That lets any appreciation in the house's value happened outside the estate.

It lets them claim a discount on the five of the house when they put it into the trust.

They will not ultimately have to pay as much in estate taxes.

Every dollar they save outside the estate, you save $.40 on the tax.

How unusual is this, how many people actually pay the estate tax?

Moves are very common like this if you are very wealthy.

A qualified principal residence trust is gobbledygook for many americans but if you have $8 billion it is common.

The estate tax only applies to a sliver of americans.

Of the people who will die in 2014, only about .14% will pay it.

I would emphasize the point, what the clintons are doing is legal.

There is nothing legally wrong.

We could argue about the fx and -- we could argue about the ethics and the optics of it.

From a legal standpoint, shielding some assets from the estate tax is fine.

The estate lawyers i talked to say this kind of planning they have done is very vanilla.

The irs lays out the steps you need to take to make sure you are following all the rules to do it.

There might be challenges, the irs can always look at a retirement and say you value the house wrong or weird going to challenge you on this.

The techniques are not anything crazy or a legal, for sure.

How cognizant are the clintons about this kind of deal?

Is this their financial planner doing something smart or are they involved in the process?

They have to be involved enough to sign the document.

They are aware enough where they are involved in signing.

They have estate lawyers in new york, people who really specialize in planning for high net worth individuals.

They have hired some of the best and they are following their advice.

I mentioned we could debate the optics of this, why don't we do that?

We will bring al hunt into the conversation, bloomberg view columnist and host of "political capital." is this the right thing to do for hillary clinton?

Is part of a larger problem she has.

First, it does show that the estate tax is not about intergenerational or entrepreneurial transfers as supporters say.

It is action for wealthy heirs.

As irwin seltzer once said.

I don't even think there is an ethical problem, the optics are terrible.

Once you put that together with hillary giving speeches for two hundred thousand dollars at goldman sachs, people say is she one of us or not?

I do not think people have problems voting for somebody who is wealthy.

They have problems with somebody who talks a great deal about a struggling middle-class and working-class and seems to spend a lot of time with the rich and privileged.

What american in his or her right mind would want to pay one cent more in tax that he or she owes?

This is a country that was born in a tax revolt.

I do not disagree.

I believe we should pay more taxes.

I believe social security benefits for upper income people should be curbed.

I think my social security benefits -- i take my social security benefits and do not pay more taxes.

You asked about the optics, the optics are bad.

What does hillary clinton need to do?

She should stop giving speeches to goldman sachs.

[laughter] if she is worth $50 million a year, she does not need to hundred thousand dollars.

Onvia straight -- on the estate tax, my guess is they are not going to do much about it.

If they are asked, they will say you ought to get rid of the loophole.

I'm not sure where to go with this.

The optics are terrible.

Rich deserves credit for bringing this to light.

What is her alternative?

Do you not tax shelter some of your assets, as you should -- i have a hard time arguing that you should not do it.

Everybody should be trying to reduce his tax bill and pay only what he or she owes.

Erik, you are right.

What you should do if you are hillary clinton is say what i want to do is real tax reform that does not allow a multitude of shelters for people who do not need them and are not economically productive.

And really do not help us create jobs -- then she exposes herself as a hypocrite by saying i want tax reform but until -- she is in a no-win situation.

Bill clinton has been saying i had to pay more taxes for years.

He does not, but he says i ought to pay more.

Tries not to at the same

This text has been automatically generated. It may not be 100% accurate.


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