Friday, June 15, 2018

Estate Tax Basics


Many people hear the term “estate tax” and assume that estate taxes only apply to the very wealthy. However, that’s not always the case.

Estate taxes are taxes applied to transferring property to heirs. When a person dies and leaves behind a property to others, that estate will be taxed if it’s worth a certain amount, hence the name “estate tax.” Unfortunately, many people also call this tax by a much darker name- the “death tax.”  

Whatever you want to call it, right now the federal estate tax rate is 40%.

When You Plan an Estate

Obviously, you don’t have to worry about estate taxes unless you are leaving property to others. However, when you do make these plans, it’s necessary to determine the value of your estate and what taxes, if any, will be applied.

A qualified financial planner can help you with these planning needs.

When You Inherit an Estate

Estate taxes typically don’t affect the people who are lucky enough to inherit an estate or to receive other gifts of value from their deceased loved ones.

However, such people do often have to pay taxes on the money they receive. If you have recently received a gift of some kind, whether it be an estate or something else, from someone deceased, it’s a good idea to check in with a tax professional to determine what you owe and how best to file and pay it.

Pretty much everything can be taxed and is taxed- including items and assets left behind by people when they pass on. To ensure you’re paying everything you’re supposed to, don’t underestimate the value of working with a qualified, knowledgeable tax professional.

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