Estate tax
The Estate Tax is a tax on the right to transfer property at one?s death. It consists of an accounting of everything one owns or has certain interests in at the date of death . The fair market value of these items is used, not necessarily what one paid for them or what their values were when one acquired them. The total of all of these items is the "Gross Estate. The inclined property may consist of Cash and Securities, Real Estate, Insurance, Trusts, Annuities, Business interests and other assets .
Once accounted for the Gross Estate, certain deductions are permitted in incoming at the "Taxable Estate ." These deductions may include Mortgages and other Debts, Estate Administration expenditure, property that passes to Surviving Spouses and Qualified Charities . The value of a small number of operating business interests or farms may be shortened for estates that qualify.
After the net amount is computed, the value of lifetime taxable gifts is added to this number and the tax is computed . The tax is then reduced by the available unified credit . Presently, the amount of this credit reduces the computed tax so that only total taxable estates and lifetime gifts that exceed $1,000,000 will actually have to pay tax .
Generally, the estate tax return is due nine months after the date of death. A six month postponement is obtainable if requested earlier to the due date and the anticipated accurate amount of tax is paid previous to the due date .
There can be some variation, but for returns that are established as filed and contain no other errors or special conditions, one should expect to hang around about 4 to 6 months after the return is filed to receive the closing letter. Returns that are chosen for examination or reviewed for statistical purposes will take longer.
The Gross Estate of the decedent consists of an accounting of everything one owns or has certain interests in at the date of death . Generally; the gross estate does not include property owned solely by the decedent\\'s spouse or other individuals . Lifetime gifts that are complete are not included in the Gross Estate (but taxable gifts are used in the computation of the estate tax) . Life estates given to the decedent by others in which the decedent has no additional control or power at the date of death are not included .
The deductions available to reduce the Estate Tax:
1. One of the primary deductions for married decedents
is the Marital Deduction . All property that is incorporated in the gross
estate and passes on to the surviving spouse is entitled for the marital
deduction . The property must pass "outright." In some cases,
certain life estates also meet the requirements for the marital deduction .
2. Charitable Deduction: If the decedent leaves property to a qualifying
charity, it is deductible from the gross estate.
3. Mortgages and Debt.
4. Administration expenses of the estate.
5. Losses during estate administration.
The information required to include with the return:
1. Copies of the death certificate
2. Copies of the decedent\\'s will and/or relevant trusts
3. Copies of appraisals
4. Copies of relevant documents regarding litigation involving the estate
5 . Documentation of any unusual items shown on the return (partially
included assets, losses, near date of death transfers, others) .
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