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.