What are Estate Taxes?The
saying goes that there is no escaping death or taxes. It hardly seems
fair, but an ordinary tax return must be filed for the last taxable year
of a person’s life. Estate tax is different. Estate taxes are high but
there is an excluded amount that changes year by year that can pass free
of tax. For U.S. citizens in 2013, the excluded
amount will be $5.25 million dollars in value, with an estate tax of 40% on
assets over that amount.
Estate
taxes apply to the total fair market value of the deceased’s estate,
including houses, life insurance, bank and stock accounts, savings
bonds, IRAs, jewelry and other personal effects, and other assets on the
date of death. Final medical bills, funeral expenses, administration
costs, gifts to charity, and attorney's fees are usually subtracted from this
number to calculate the net taxable estate. Estate tax will generally be due when the net taxable estate exceeds
$5,250,000 in 2013 and thereafter adjusted upward for inflation. If an estate is over
that threshold, there are still a number of ways of
transferring wealth prior to death that may effect taxation.
Information on this website is not legal advice or a substitute for legal advice. Every situation
is different. You should contact your attorney to obtain advice on your
particular issue or problem.
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