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Estate Tax Law Questions
When a person dies they may leave an estate behind, an estate that may be made up of assets such as cash that are in bank accounts,
, mutual funds, and many other things. If a person is to inherit the assets often they will need to look into what the estate may cost them in
. The estate may not have a net value high enough to trigger and estate tax, but to be safe an individual will want to look into what the estate
are for their state and sometimes the state of the deceased. Below are questions that have been asked of the Experts, in regards to estate
What is estate tax?
Estate tax, which may also be known as an
, is a tax that is to be paid out by the individual who has inherited real property or money of another individual who has passed away. Internationally the terms estate tax and inheritance tax may not be interchangeable as an estate tax is the tax that has been gauged on the deceased’s assets and an inheritance tax has its basis on the legacies that the beneficiaries of the estate have received. In the United Kingdom an estate tax may also be known, though not legally, as a death duty.
How does estate tax work if the individual is a permanent resident of the United States but is a citizen of another county?
have the estate tax impressed upon the transfer of said estate of all decedents that are United States citizens or are residents of the United States. If an individual meet the requirements of the domicile residence analysis test, they will the same as a United States citizen and will be subjected to the estate tax laws on all of their assets world-wide. If two citizens of the United States are married and one of the individuals becomes deceased the transfer of assets to the survivor are not subjected to the estate tax, due to the Martial
of Sec. 2056. However if the married couple consists of a United States citizen and a resident non-citizen, and the transfer or assets is in excess of $100,000; it is not going to be eligible for the
and the difference between the amount being transferred and $100,000 will be subjected to the estate tax, unless a qualified domestic trust have been put in place.
Can an individual pre-pay their estate taxes in the State of Arizona?
At this time it is not possible for an individual to pre-pay their estate taxes. There has been much discussion of this becoming possible somewhere in the future, but at this time it has not made in to the tax laws regarding estate taxes. However if an individual’s estate is valued at less than five million dollars then the estate will not be subjected to estate tax.
If an IRA is transferred through an estate to the beneficiaries is it subject to estate taxes?
When an IRA is transferred through an estate, it is not subject to estate taxes. If the transfer is to the surviving spouse, the IRA becomes the spouse and allows the spouse to keep contributing into the account. If the beneficiary is anyone else then the IRA would also become theirs with the difference being that they are not allowed to make contributions into it. However, the IRA may be continued. In either case of beneficiaries the IRA is able to be cashed out with the funds being penalized. However once the IRA is cashed out then the funds will be taxed.
If an IRA is passed on to a beneficiary, it may be continued, but only if it is passed to a spouse is it able to be contributed to. Any beneficiary may cash the IRA in without being penalized, but the funds will be taxable. If an individual has any questions regarding estate tax law they should seek the assistance of the Experts.
Recent Estate Tax Questions
Mom passed this year. Dad 4 years ago. Only estate asset
Mom passed this year. Dad 4 years ago. Only estate asset was their house. Mom had two $10,000 insurance policies split between 3 sisters. One insurer withheld taxes, the other did not. Home appraised at $535M and sold for $415,000. After settling expenses we each received a check for $115.000. The home was in NJ and I live in Florida. I understand through our lawyers that no estate tax or income tax is due to NJ. And I also looked into Florida and do not owe anything here. My questions is whether in this circumstance I have to dislclose the home proceeds on my federal return? I know I will have to disclose the insurance income but not sure where this goes on the 1040 form. (so that is also a question). I always just file 1040ez. I earn $32,000/yr and the personal exemption is more than anything I might be able to claim.
I have a client with an IRA of $ 150K. They are MFJ and also
I have a client with an IRA of $ 150K. They are MFJ and also receive about $ 34.5 in SSI. In 2014 the IRA owner turned 65, and the spouse is 66. The IRA is invested in CDs. The concern is saving as much from income tax as possible and retaining as much for heirs. The taxpayers property is paid off. I don't see any benefit to converting the IRA account into any other type of investment vehicle since their tax bracket is 15% and likely remain so. Also, they could gift up to the $ 13K per year.
I'm the trustee/executor of my aunt's estate; she died last
I'm the trustee/executor of my aunt's estate; she died last month. In 2010, an elder care lawyer set up a trust to manage her estate. At the same time, the attorney "sold" her house to me as the remainderman preserving a life estate in my aunt. I'm in the process of selling the house and am trying to figure out the capital gains issues. She bought the house in 1997 for $182,000. At the time of the 2010 sale, the value was $521,000 according to the NYC property assessment record. Its current assessed value is $584,000 according to the same source, but I just had it appraised and its appraisal value is $650,000. We owe approximately $490,000 on the reverse mortgage we took out to pay for my aunt's 24/7 in-home health care for the last six years. What will be the basis for the calculation of my capital gain - $182,000, $521,000 or $584,000? And will the capital gains rate will be based on my taxable income rate since I have never lived in the house and have my own home? Thanks!
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