Will You Have to Pay Estate Taxes?
Are you or your loved ones prepared to pay the tax expenses that will be incurred when someone passes away? Do you know what your estate is valued? These are important questions when concerned about estate tax.
The estate tax, also known as the death tax, is the tax the government imposes on the transfer of the taxable estate of a deceased person to any beneficiaries. The taxable estate is derived after certain deductions are removed from the gross estate amount. Some of these deductions can include mortgages, estate administration expenses, or other debts. A law professional should be consulted to learn more about all these deductions and how to take advantage of them.
Any property or assets that are being taxed will be valued at the fair market price. This means they will be taxed for what they are valued at, not at the price you paid for it. Keep this in mind when evaluating your assets.
The federal government also allows for a base amount to be tax exempt. As of 2011, any estate valued lower than $5 million dollars are considered exempt from the estate tax. However, any excess amount over this limit will be taxed at the current year's rate of 35%. The exclusion amount limit and tax rate change almost every year, so it is a good idea to keep in touch with a professional to ensure you are up to date with the current numbers.
As always when dealing with taxes with the federal government, there are a lot more rules and exceptions. It is important to contact a lawyer for complete information and guidance over the protection and well being of your or your loved ones estate.