In last Sunday’s final episode of “Breaking Bad”, Walter White broke into his former business partner’s house (Elliot and wife Gretchen).

Reason?  To give them close to 10 million dollars in cash so they would set up a trust for Walter’s son.  

Walter had been looking for ways to get the cash to his family.  After all, the whole reason he started into the meth business in the first place was to provide for his family after his death from cancer.

Some of the ways he tried to hide the money included:

  • burying the cash in the desert and keeping the GPS coordinates.  That failed miserably.
  • sending his son a package of cash via a friend, but the son refused to take the dirty money.

Then he thought of some normally legitimate estate planning techniques.

Prior to becoming a meth king and chemistry teacher, Elliot and Walter created a company called Gray Matter.  This company blossomed into a gigantic pharmaceutical company.

Walter thought having Eliot and Gretchen set up the trust would be a perfect camouflage.  They were rich and why wouldn’t they want to help out the poor kid?

Note that all of this is highly illegal and would bring Elliot and Gretchen into a criminal conspiracy.

Knowing that they would be hesitant to help him out, Walter blackmails them by having two assistants point laser lights on them from outside the house.  Elliot and Gretchen think that laser sighted rifles are being pointed at them.  Walter threatens that if they fail to set up the trust his assistants have been paid to kill them.

Now to the tax part of the blog.  If the money from Walter had been from legitimate sources – could he have given away $10 million to his son tax free?  Answer is yes.

There is a gift tax, but it allows you to gift $5,250,000 in 2013.  This does not even include the annual gift tax exclusion of $14,000 (also 2013).  So Walter and his wife could have collectively given away at least $10.5 million dollars.

There are other tried and true estate planning techniques that can effectively allow you to gift even more.

Additionally, it is always smart to make large gifts via trusts or other estate planning entities.  This allows for asset protection and protection from the beneficiary spending recklessly.

But if the government caught on to Walter’s shenanigans there would be absolutely no tax savings or asset protection.  Additionally, it would be a great way for all to spend a vacation at the federal penitentiary.