This picture was taken in 2002, four years before my dad fell, hit his head and died after two brain surgery's to reduce the pressure on his brain. While in intensive care the surgeon told the family he was bleeding in the center of his brain. He lived for a week unconscious before dying. I'll never forget the phone call from my brother Preston, telling me "Dad's gone."
My dad at 51, and me during the filming of Goodbye Norma Jean in 1974. He was in his prime and he had a Living Trust.
It's bad enough going thorough the trauma of losing a parent, but having to deal with his estate, has been a 10 year nightmare. It still isn't settled after years of fighting a lawsuit and the economic downturn. The year he died, 2006, the Death Tax was around $2,000,000. meaning anything over that was taxed 55%. Today if a person dies and leaves an estate under $5,430,000 there is no Death Tax.My Dad in his late 60s, still robust and productive. He had a Living Trust.
If my Dad hadn't had a living trust and a good Tax Attorney and Accountant the nightmare after his death, would have been unbearable. If you are considering a Living Trust do it now. I have one and have had it for over 10 years. I wouldn't want anyone to ever face Probate. I think you might be interested in seeing how an Estate Tax would impact your family today.What is Estate Tax and how does it Impact Me?
All forms of property, irrespective the format of ownership, that an individual owns at the time of their death is subject to federal estate tax. This tax is then payable through your estate. Normally, it will be paid by the decedent’s estate before the distribution of properties to the estate’s beneficiaries. Estate taxes are due, barring an extension, within a period of nine months of the individual’s death.Exclusions on Estate Tax
Though the majority of the decedent’s assets will be included within the gross estate, occasionally there are exclusions. If the property is left outright to a spouse, then the federal tax liability is nil. It is a scenario referred to as marital deduction.
Should the decedent leave property to a charity that is tax-exempt, there will be no tax.
The Payment of Estate Taxes
Most Americans will not be subjected to federal estate taxes. As a matter of fact, it’s a tax that only impacts the wealthiest of Americans in most (but not all) states. For a death that has occurred during 2015, the exemption on federal tax has been set at $5,430,000, per person. If you exceed that amount, then a 40 percent tax levy is applied.
How to make a Calculation and File
The calculation of federal estate tax is potentially a complex matter. As such, it is thoroughly advisable to utilize the services of an estate tax attorney or other tax professional to receive help. An attorney who works in the practice of estate planning will be able to help you through the process, keep you updated as to any new laws, and also complete all the filing matters for you.
Nevertheless, if you are not quite ready to engage the services of an attorney just yet, and you merely wish to gain some concept as to the amount you could owe, you may utilize an estate tax calculator online. These can afford a reasonably good idea as to how much you will owe.
To use an online calculator, you will require as much information as you can garner with respect to cash and retirement accounts, investment accounts, vested stock options, life insurance proceeds, your home’s value, vehicles, together with any other assets. You will also need to know about your liabilities, unused exemptions of federal estate tax, charitable bequests, and taxable gifts.
You may wish to file on your own, in which case, you should use IRS Form 706. During the preparation of the return, do remember that you must file for an estate’s gross value rather than net value over and above the estate tax amount of exemption.
The return is due within nine months of death. Should you require more time, it is possible to pay an estimated tax prior to the due date, after which, you must file for an extension of six months. If you need help with filing, read through the IRS’s Publication 950.
Estate Taxes for the State
There may be no federal estate tax owed by an estate, but there are 15 states together with the District of Columbia that do levy their own taxes, and an individual does not have to be super wealthy to have to pay.
Currently, as of 2015, the following states are included: Rhode Island, New Jersey, Maryland, Maine, Minnesota, Massachusetts, Oregon, New York, Washington, Vermont, Delaware, Connecticut Tennessee, and Hawaii.
When will an Estate be Subjected to Federal Estate Tax?
With the death of an individual, an estate will become a taxable entity. Prior to the calculation of the tax, your real property, gross estate of money, and any other assets whereby you had some form of interest at the time of death, minus marital and charitable deductions, in addition to administration expenses of the estate, together with other acceptable deductions, will be tallied by the IRS to assess your net taxable estate. If the taxable estate is to exceed the decedent’s exemption, federal tax is then payable. In 2015, the amount of exemption is $5.43 million. However, if you are married, your spouse has a separate exemption entitlement of a further $5.43 million.
The IRS closely scrutinizes the assets that are included in the estate as well as the worth of each item. This can and frequently does become the source of frustration between an estate and the IRS.
If your family owe estate taxes, use the services of a recommended tax lawyer in Rochester.