Death and Taxes
February 2, 2012 By Deborah Sexton Law Office, PA
The “death tax” is a euphemism for the estate tax. Estate tax is imposed "on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States.
• Federal estate tax -- In 2009 decedent’s estates that are valued at more three and a half million dollars are subject to the federal estate tax. The tax for 2010 has been repealed but the repeal is temporary.
• State inheritance taxes --In addition to the federal estate tax, many states impose an estate tax although it is often called an inheritance tax and must be paid out of the deceased estate. Some states "piggyback" on the federal estate tax law concerning estates subject to tax (i.e., if the estate is exempt from federal taxation it is also exempt from state taxation).Some states' estate taxes, however, operate independently of federal law, so it is possible for an estate to be subject to state tax while exempt from federal tax.
Estate Planning to Avoid Taxation
The maximum tax rate for an estate under the federal estate tax scheme is 45% of the taxable estate. This does not include any amounts that may be due under state inheritance tax statutes. The complex nature of estate tax and the large tax liability has led to many methods of tax avoidance. Insurance companies, financial planning and brokerage firms and law firms all market and specialize in estate planning and tax avoidance. One of the most common methods of estate planning is with wills and living trusts. Husband and wife’s can combine their estate tax exemptions though these documents. These instruments must be drafted and execute carefully to avoid creating a larger tax liability on the surviving spouse or children.
You cannot avoid death or taxes. You can minimize federal and estate taxes by proper planning. Consult with a qualified attorney on estate matters. Estate tax planning wills and probate are not for the do-it-yourselfer.
ABOUT THE AUTHOR: Deborah Sexton
Experienced estate planning attorneys Fayetteville AR of the Deborah Sexton Law Office PA offers estate planning and business planning resources to residents of Fayetteville AR.
Copyright Deborah Sexton Law Office, PA
More information about Deborah Sexton Law Office, PA
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
• State inheritance taxes --In addition to the federal estate tax, many states impose an estate tax although it is often called an inheritance tax and must be paid out of the deceased estate. Some states "piggyback" on the federal estate tax law concerning estates subject to tax (i.e., if the estate is exempt from federal taxation it is also exempt from state taxation).Some states' estate taxes, however, operate independently of federal law, so it is possible for an estate to be subject to state tax while exempt from federal tax.
Estate Planning to Avoid Taxation
The maximum tax rate for an estate under the federal estate tax scheme is 45% of the taxable estate. This does not include any amounts that may be due under state inheritance tax statutes. The complex nature of estate tax and the large tax liability has led to many methods of tax avoidance. Insurance companies, financial planning and brokerage firms and law firms all market and specialize in estate planning and tax avoidance. One of the most common methods of estate planning is with wills and living trusts. Husband and wife’s can combine their estate tax exemptions though these documents. These instruments must be drafted and execute carefully to avoid creating a larger tax liability on the surviving spouse or children.
You cannot avoid death or taxes. You can minimize federal and estate taxes by proper planning. Consult with a qualified attorney on estate matters. Estate tax planning wills and probate are not for the do-it-yourselfer.
ABOUT THE AUTHOR: Deborah Sexton
Experienced estate planning attorneys Fayetteville AR of the Deborah Sexton Law Office PA offers estate planning and business planning resources to residents of Fayetteville AR.
Copyright Deborah Sexton Law Office, PA
More information about Deborah Sexton Law Office, PA
View all articles published by Deborah Sexton Law Office, PA
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
