Who has to pay estate taxes?
Depending on how much you own when you die, your estate may have to pay estate taxes before your assets can be fully distributed to your loved ones. Estate taxes are different from, and in addition to, probate expenses (which can be avoided with a revocable living trust) and final income taxes (on income you receive in the year you die). Federal estate taxes are expensive (historically, 45-55%) and they must be paid in cash, usually within nine months after you die. Since few estates have this kind of cash, assets often have to be liquidated. But if you plan ahead, you can reduce and even eliminate estate taxes.What is my taxable estate?
Your taxable estate comprises of the total value of your assets including your home, other real estate, business interests, your share of joint accounts, retirement accounts, and life insurance policies – minus liabilities and deductions such as funeral expenses paid out of the estate, debts owed by you at the time of death, bequests to charities and value of the assets passed on to your U.S. citizen spouse. The taxes imposed on the taxable portion of the estate are then paid out of the estate itself before distribution to your beneficiaries.
Depending on how much you own when you die, your estate may have to pay estate taxes before your assets can be fully distributed to your loved ones. Estate taxes are different from, and in addition to, probate expenses (which can be avoided with a revocable living trust) and final income taxes (on income you receive in the year you die). Federal estate taxes are expensive (historically, 45-55%) and they must be paid in cash, usually within nine months after you die. Since few estates have this kind of cash, assets often have to be liquidated. But if you plan ahead, you can reduce and even eliminate estate taxes.What is my taxable estate?
Your taxable estate comprises of the total value of your assets including your home, other real estate, business interests, your share of joint accounts, retirement accounts, and life insurance policies – minus liabilities and deductions such as funeral expenses paid out of the estate, debts owed by you at the time of death, bequests to charities and value of the assets passed on to your U.S. citizen spouse. The taxes imposed on the taxable portion of the estate are then paid out of the estate itself before distribution to your beneficiaries.
Contact a Southeastern Minnesota Estate Taxes Attorney Today
If you have questions about estate taxes in Minnesota, contact Anderson & Skubitz today for a consultation to discuss your options. Call us today at 507-665-3349.