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Keeping the Money in the Family / Adapted by Rabbi Ariel Ovadia
In case you haven’t heard, the federal estate, gift and generation-skipping transfer tax (collectively known as the “death tax”) turned 100 this month.
The United States death tax is liable on estates above a “standard deduction” of about $5.4 million ($10.8 million if a surviving spouse passes). The top death tax rate is 40%. Both the inflation-adjusted exemption and the tax rate are very high by global standards.
Economists, lawmakers and activists constantly debate whether the death tax is fair or even effective. In this article we will discuss the Torah’s perspective on such taxes. This question can obviously be approached from multiple angles. We will consider the implications of the Halachic admonition against overriding the Torah’s inheritance laws by stipulating an alternate disposition of one’s property.
A’avure Achsanta
The Gemara in Bava Batra[1] states that Hachamim do not approve[2] of one who bequeaths his assets to others in lieu of his heirs. To the best of my knowledge, however, the literature on this topic only concerns an individual who chooses to do so. [3] It would be an unprecedented extension of the idea to cover a governmental edict to redirect a decedent’s assets away from his heirs to the government (i.e., the public) entirely against the decedent’s will.
Furthermore, there are several other potential limitations of the disapproval of the Hachamim that might render it inapplicable to the case of the estate tax:
[1] Leaving some assets to be divided according to Halacha: There is considerable debate over whether Hachamim only disapprove of one who gives away all his assets; one who retains some – even a symbolic amount – and certainly a significant amount, to be governed by the ordinary rules of inheritance, may be doing nothing wrong.[4] Since the estate tax as currently constituted exempts the first several million dollars of an estate, and takes at most 40% of the remainder, with the rest of the estate subject to the normal laws of inheritance, it may not constitute a problematic overriding of the Halachot of inheritance.
[2] Charitable giving: There is also considerable debate over whether Hachamim also disapprove of one who bequeaths his money to charity (particularly if they only dedicate a portion of the estate to charitable giving).[5] Insofar as tax receipts are used for social welfare purposes, particularly to help the indigent, perhaps the Hachamim would not disapprove.
Rav Asher Weiss שליט”א boldly asserts that the entire problem of evading the Torah’s system of inheritance hinges on one’s motivation: it is only problematic insofar as his motivation is negative – to deprive an heir of his rightful inheritance, out of anger, hatred or disapproval of their improper conduct. However, if the motivation is positive – to give the assets to others, based on reasonable considerations, there is nothing at all wrong with doing so.[6] According to this view, the legitimacy of the estate tax would depend on its motivation: if it is designed to fund (reasonable) government spending, it would be legitimate. However, if it is meant as a means to undo the concentration of wealth within families or to address some other political issue it may be a problem.
Sources:
[1] 133b; Shulhan Aruch, Hoshen Mishpat 282:1
[2] The expression of the Gemara is: “En Ruah Hachamim Noha Heimenu”. Our translation follows the interpretation of Rashbam (ad loc.) and the Sema 282:2, although the phrase – which appears in various different contexts in the Talmud – is sometimes understood differently; see Maharsha Bava Kama (Hidushe Agadot 94b); Tosafot Yom Tov (Avot 3:10) and Talmudic Encyclopedia 1:716-17.
[3] Hachamim also admonish third parties against facilitating an A’avure Achasanta – exclusion of rightful heirs. This may apply to the lawyer or accountant who advises or carries out these transactions.
[4] See Teshuvot Maharam ben Baruch (Prague) 998; Tashbatz 3:147 (partially cited in the Ketzot HaHoshen §2); Teshuvot Hattam Sofer (Hoshen Mishpat, 151); Pithe Teshuvah §1; Igrot Moshe (Hoshen Mishpat 2:50:1); Shevet HaLevi 4:216; Mishpat HaTzava’ah (Vol. 1, Helek 2, Dinim 2:1).
[5] See Maharam, Hattam Sofer, Pithe Teshuvah, Igrot Moshe, Shevet Ha’Levi, and Mishpat HaTzava’ah cited in the previous footnote; Mishpat HaTzava’ah ibid. ch. 8; Shulhan Aruch HaRav (Hilchot Mechira, Seif 8). For a very sharp debate on this question, see Arthur M. Silver, May One Disinherit Family in Favor of Charity?, Tradition Vol. 28 No. 3 (Spring 1994), pp. 79-93, Rabbi Hershel Schachter’s rebuttal in Tradition Vol. 29 No. 4 (Summer 1995) pp. 87-90, and Rabbi Silver’s defense there pp. 90-93.
[6] Minhat Asher, Parshas Haye Sara – A’avure Achsanta. This same basic distinction between positive and negative motivations appears in Igrot Moshe ibid., although the holding there is not necessarily as broad as Rav Weiss’s claim that there is no problem at all of A’avure Achsanta in the former case. The implication of Hattam Sofer ibid., however, is that there is no such distinction. Cf. Mishpat HaTzava’ah ibid. 8:3.