By: Layne Blasingim
When someone passes away, they may leave behind assets such as property (real and/or personal), investments, checking accounts and savings accounts. The process of transferring these assets to their beneficiaries is called estate administration. As part of this process, the estate may be subject to taxes and required to file an estate tax return (Form 706).
Estates are subject to federal estate tax if the total fair market value of the assets within exceeds a certain threshold. As of 2023, this threshold is $12.92 million per individual, meaning that if the total fair market value of an individual’s estate is less than this amount, it will not be subject to federal estate tax. However, if the value of the estate is above this threshold, the excess amount is taxed at a rate of up to 40%.
Additionally, some states also have their own estate or inheritance taxes, which may have different thresholds and rates. There is difference between estate and inheritance taxes. Estate taxes are paid by the estate, while inheritance taxes are paid by the person who is inheriting the assets. These taxes are generally based on the value of the assets left behind, but the specific rules vary by state.
It should be noted that there are certain exemptions and deductions available that can reduce the amount of estate tax owed. One such deduction is the marital deduction, which allows a surviving spouse to inherit an unlimited amount of assets without incurring estate tax.
Please note that information and guidance on Estate Planning is situational. The information provided in this article is current as of the date of the article. It is intended for general informational purposes only. Consult with your financial or tax advisor about your specific situation.
Suttle & Stalnaker PLLC is ready to help you. If you would like more information on how this applies to you, contact Elaine Dougherty, CPA in our Morgantown Office at 304-554-3371 or email Elaine at edougherty@suttlecpas.com.