Will my estate be subject to death taxes?
There are two types of death taxes that you should be concerned about: Federal estate tax and State inheritance taxes.
The federal estate tax is computed as a percentage of your net estate.
Your net taxable estate at time of death is made up of all assets you own or control minus certain deductions. Such deductions can be for administrative expenses, like funeral and burial costs, and charitable donations.
The federal estate tax currently taxes estates with assets of $5,000,000 or above. However, this law is set to expire in 2013. The exemption amount may be reduced at that time if Congress does not act.
Even if you believe that that you may not be affected by the federal estate tax, you still need to determine whether you may be subject to state estate and inheritance taxes.
And you might have a taxable estate in the future as your assets appreciate in value.
You should regularly review your estate plan with an estate planning attorney to ensure your estate plan takes into account changes in the tax laws as well as shifts in your individual circumstances.
This is for information only and not the providing of legal or tax services. You should always consult with a lawyer or income tax professional prior to making decisions about estate planning and death taxes.