Questions about the application of the death tax
Kevin from Wisconsin asks,
Q: My father died in September of 2007 in Wisconsin and my parents had no will. Their net worth was $2.6 millon as of his death. Is there going to be any death tax to me when my mother dies since there was no will between them? What can be done to prevent a lot of taxes when my mother dies in the future? I've been hearing something about $675,000 in taxes owed if she passes that down before the 9 month period after death. That would save on the 44% tax. What's the deal with that?
A: The estate tax in the United States is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred via a will or according to the state laws of intestacy. The estate tax is one part of the Unified Gift and Estate Tax system in the United States. The other part of the system, the gift tax, imposes a tax on transfers of property during a person's life; the gift tax prevents avoidance of the estate tax should a person want to give away his/her estate just before dying.
In addition to the federal government, many states also impose an estate tax, with the state version called either an estate tax or an inheritance tax. Since the 1990s, the term "death tax" has been widely used by those who want to eliminate the estate tax, because the terminology used in discussing a political issue affects popular opinion.
If an asset is left to a spouse or a charitable organization, the tax usually does not apply. The tax is imposed on other transfers of property made as an incident of the death of the owner, such as a transfer of property from an intestate estate or trust, or the payment of certain life insurance benefits or financial account sums to beneficiaries.
That being said, this tax was probably not applied to your mother.
Got a tax question? Send it to us!
Q: My father died in September of 2007 in Wisconsin and my parents had no will. Their net worth was $2.6 millon as of his death. Is there going to be any death tax to me when my mother dies since there was no will between them? What can be done to prevent a lot of taxes when my mother dies in the future? I've been hearing something about $675,000 in taxes owed if she passes that down before the 9 month period after death. That would save on the 44% tax. What's the deal with that?
A: The estate tax in the United States is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred via a will or according to the state laws of intestacy. The estate tax is one part of the Unified Gift and Estate Tax system in the United States. The other part of the system, the gift tax, imposes a tax on transfers of property during a person's life; the gift tax prevents avoidance of the estate tax should a person want to give away his/her estate just before dying.
In addition to the federal government, many states also impose an estate tax, with the state version called either an estate tax or an inheritance tax. Since the 1990s, the term "death tax" has been widely used by those who want to eliminate the estate tax, because the terminology used in discussing a political issue affects popular opinion.
If an asset is left to a spouse or a charitable organization, the tax usually does not apply. The tax is imposed on other transfers of property made as an incident of the death of the owner, such as a transfer of property from an intestate estate or trust, or the payment of certain life insurance benefits or financial account sums to beneficiaries.
That being said, this tax was probably not applied to your mother.
posted by Scott at
5:08 AM
0 Comments:
Post a Comment
<< Home