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Death Tax: Part 2

By September 4, 2017 No Comments

The Death Tax Series (Part 2 of 3)

We all worry about income tax, but there are other taxes that you need to consider when you’re dealing with an estate or a property that is switching hands either at death or during life. In part 1 we covered the gift tax. In part 2 we will cover the federal estate tax.


Part 2: The Federal Estate Tax

Understanding The Federal Estate Tax – Dealing with the loss of a loved one is never easy and the extra burden of now having to manage the estate, its finances and taxes can be quite overwhelming.  The Federal Estate Tax is a tax on your right to transfer property at death.  It is paid by the estate—not the heirs. The rate is a flat 40%. The good news is that unless the estate is worth over $5.45 million and you did not use any of your gift exemption during your lifetime, you don’t owe a cent to the government.

Additionally, for married couples, a surviving spouse may elect to pass any of the deceased spouse’s unused exemption to his or her estate.  This is called portability and may be elected on a timely filed estate tax return.  Therefore, even if you do not believe you will owe taxes on your loved one’s estate, it is still important to consult a CPA to ensure you understand and take advantage of portability.

Stay tuned next week when we will wrap up this 3 part series. In the meantime, feel free to contact us for a free consultation.