Estate tax law is a complex area of the law that can be difficult to understand. It is important to understand the basics of estate tax law in order to protect your assets and ensure that your estate is distributed according to your wishes. Estate tax law is a combination of federal and state laws that govern the taxation of property and assets that are transferred from one person to another upon death. This article will explain the basics of estate tax law, including who is subject to estate taxes, how estate taxes are calculated, and when estate taxes are due.
Who is subject to estate taxes?
The federal government imposes estate taxes on the estates of individuals who have a gross estate of more than $11.58 million. This amount is adjusted annually for inflation. The estate tax rate is progressive, meaning that the higher the value of the estate, the higher the rate of taxation. In addition, some states also impose estate taxes, though the rules and rates vary from state to state.
How are estate taxes calculated?
Estate taxes are calculated based on the fair market value of the decedent’s assets at the time of death. This includes real estate, stocks and bonds, and other financial assets. The value of any debt owed by the decedent is subtracted from the value of the assets to determine the taxable estate. In addition, certain deductions and exemptions can be taken to reduce the taxable estate.
When are estate taxes due?
Estate taxes are typically due nine months after the date of death. However, an extension can be requested if the estate is unable to pay the taxes by the due date. The executor of the estate is responsible for filing the estate tax return and paying any taxes due.
Understanding the basics of estate tax law can help you protect your assets and ensure that your estate is distributed according to your wishes. It is important to consult with a qualified attorney who can provide more detailed information about estate tax law and help you plan for the future.