The Estate Tax
An estate is a collection of items that people leave behind when they die. In many cases, an estate tends to be small. Many people will leave behind some very basic things. This might include a paid up house or a home with a mortgage on it. It also might mean a series of dividend paying stocks as well as some long term bonds. Larger estates typically include such items. They might also include artwork, valuable jewelry and interest in a flourishing business. The Internal Revenue Service or IRS takes great interest in what happens to people’s things when they die. They want to make sure that all items that are left to others are fully examined by the appropriate authorities before the intended recipient gets ahold of them. This means conducting certain actions that may lead to the demand for additional taxes paid for by the estate as a whole or by the person who is gifted such items when someone dies.
In many instances, particularly when it comes to much larger estate, the government will take a long, hard look at the items being left. They might do things such as hire an independent expert to appraise the items. That means having a home that has been left to others appraised in full. The home may have a value that has not been updated for many years. A fresh appraisal may bring up the value by a great deal and thus bring up the entire tax bill in the process. This can also be applied to other items such as antique jewelry, paintings that have been left to a foundation and stocks that might have seen a vast jump in price since the person first bought them many years ago.
Appealing the Taxes
Some states have an estate or an inheritance tax. For example, if you live in New York, Maine, Washington, Oregon, Illinois, Minnesota and a few other states, items and money that you get from a person’s estate may be subject to taxes from the state government. There are other states that impose what is known as an inheritance tax. This is a tax that is applied to certain estates over a given value. Maryland actually has both an estate tax and an inheritance tax for residents who live there and have an estate that is passed on to them.
Most people will not have to worry about either the state or federal inheritance tax. However, a small handful of people may find this tax has the ability to affect how they are going to conduct their business and live their lives. It can impede a person’s ability to determine exactly how they would like their money distributed after they pass on. There also may be competing claims on such large estates. A close relative may lay claim to least part of the estate. There may be claims laid by a larger organization that was promised funds when someone died. All of these factors can impede how the funds are disbursed when the person dies. This can also create all kinds of issues when it comes to the overall value of the estate.
This is why you will need to think carefully about your estate before you die, especially if you have a lot of money. Your funds can easily be eaten up the government and used for purposes you do not want. Proper estate planning can head off this issue. It can make sure that all necessary rules are followed before you pass on.
Good Legal Counsel
Good legal counsel is a must for anyone facing this issue. That includes a consultation with a lawyer who knows all about legal issues of this kind before you begin. It also means being able to work with a lawyer who can negotiate on your behalf if you are in line to get a potentially large inheritance. The right legal help is one way to get it all in place and ready before the IRS has the chance to ambush you with claims you were not expecting. It’s crucial to have someone on your side when estate planning.
