We all get old and die. I plan to live to 115, but even then, I will die. With the quality of nursing homes being what they are, the expense of one is not to be denied to an ailing geezer. I well remember when my Mom went in. The first thing they did was to check her bank account, to be sure there hadn't been any gifts or major withdrawals within the previous calendar year. This is the point of this. My Mom lived for quite a while, and at $3,000 a month, her stash went away before she died. I had to pay $1700 to bury her, because she was absolutely broke, and with her money gone, Medicaid and Medicare took over. Unfortunately, I never have inherited a dime!
If my Mom had been really wealthy, and her health failing, I would have insisted that she take a lot of her money out of her account, and switch it into gold and silver. Why? Because the gold and silver can be left without inheritance taxes, first of all, but that's not the only reason. Suppose your parents or even you yourself are well off, and eventually will have to retire to a nursing home. No ill wishes here, but it happens to all of us. Since they are expensive, and since the American welfare system insists on paying for a nursing home if the patient is broke, why not get in on it as soon as possible? How? By, more than a year in advance, taking the dollars out of the account and placing them into a tangible, such as gold and silver.
Suppose Grandma Smith is getting on in years, and her health is beginning to fail. She's really well off, and has lots of dollars tucked away in CD's. She will end up in a nursing home eventually, and she, as well as everyone else knows it. Wouldn't it be smart, to take advantage of the welfare system? I hate it, and so do you, but we pay far more in taxes than we will ever get back, so why not take advantage of the system? The problem usually, is that Grandma doesn't really know about gold and silver, and depends on the good old dollar, which she swears by, and has used all her life. "Boy, prices are really going up," is her observation, not "Boy, the dollar is really going down," which is the correct observation. It will require a bit of salesmanship to tell her about how she isn't going to lose her wealth by buying gold and silver, but they will be well placed in beautiful tangible things, which can be passed on to her kids and grandkids without paying inheritance taxes.
My mom didn't avoid anything, because she didn't have that much to begin with, but thousands of you out there, know those who do, and whose health is failing. You, or your parents, need to get out of those dollars at least a year before you go into that nursing home or elderly care of any sort, which can be paid for with the welfare system. They won't pay as long as there is anything left in the bank account. Is this cheating? I suspect it may be, after a fashion anyway, but it just makes sense to preserve one's wealth. The geezers must have worked hard to accumulate it, and they hope to pass it on to the heirs, I am sure. Nothing will be passed on, unless you can keep the tax collector's hands off of it, or the nursing home either. $4,000 or more, a month really eats into a legacy, believe me.
This is also why I steer clear of safe deposit boxes. When you die, the contents are sealed for probate, unless the contents are in more than one name. This is why one should have one's kids names on a safe deposit box, if one must be rented. When death comes, the contents are jointly owned, and no taxes are paid. I can see nothing wrong in avoiding inheritance taxes. When a man or woman spends their life working, and accumulating things, why shouldn't they be entitled to pass their work on to their offspring? I know this can be difficult, when land, farms, or homes are concerned, because they have titles, deeds, and are registered with everyone. Tangibles, such as jewelry, rare stamps, original art, and the like, carry no serial numbers or titles. Gold and silver are not on display, like an original work of art, so they are a far better tangible. When someone dies, their home is inventoried for tax purposes.
If the elderly geezer, (I like that name!) have gold and silver locked away in a safe or in some place unknown to anyone, it is simple to pass on one's wealth to whomever one desires, by merely telling them where it is, if one dies. "Now look son, if anything ever happens to me, in the attic, under that old trunk, between the joists, you'll find a lot of Krugerrands, which are yours. Just tell no one about it, and no taxes will be due," might be a nice little conversation. We all buy gold and silver, and especially now with this nice price dip, to preserve our assets. We don't want to get washed away with the dollar, as it goes down the drain. We know that gold and silver have no serial numbers on them, have been real money for thousands of years, and in all civilizations have been used as money, until that civilization turned fetid. Our American civilization, used real gold and silver for real money till that &%$#@* FDR got into office, and the decline began. Now, we are going the way of the Greenbacks and Confederates, because the presses are running night and day. So, protect your self of course, but also protect that old geezer you love so much, by giving them good advice. Let them pass on their work to you and yours, and not pay taxes on it.
I heard the story of a Jewish family, who before WW II, had a huge furniture store in Berlin. They knew what was coming, and decided to leave, and take their wealth with them. How to do it? They sold the store, converted the results into certified diamonds, and swallowed them before crossing the border. They had preserved their wealth, by using their heads. Life is difficult enough, without having to think ahead to preserve one's assets, but it is absolutely necessary. Government growth and dollar debasement will know no limits, till it all comes down in a heap. Just imagine having all of one's wealth in dollars or dollar denominated items. It makes me sick, just to think about it, and all the millions who will be wiped out by having trust in a worthless scrip. All civilizations, and all nations throughout history, have eventually had their currencies reach absolute zero. The dollar will be no exception. It doesn't require the IQ of Einstein to know that unbacked pieces of paper fluttering around like dandelion seeds in the wind, have no real value, because they represent nothing except more pieces of paper. Protect yourself.
No column next week, because I am going on vacation. I'll have my cell phone with me if you need anything. Click on "Don's Column" on my web site, for that information.
December 10, 2004
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com