By Lane V. Erickson, Attorney
I’ve been involved in a Estate Planning as an attorney now for over 17 years. Rarely does a week go by when I don’t have a client asked me about the estate tax. Most clients just want to know whether the estate tax is going to affect them. Estate tax is also a hot topic with clients during election years because they want to know whether there’s going to be a change that will affect them. Here are three things you need to know about the federal estate tax.
1. What is the Federal Estate Tax?
The Federal Estate Tax is a tax that is paid to the federal government on a person’s property (cash, real estate, stock, or other assets) that is transferred from a person when they die to their heirs. Currently, (in 2016) estate taxes are due only on the portion of a person’s estate that exceeds the exemption level of $5.45 million. So, for example, a $6 million estate would owe estate taxes on about $550,000. The Federal Estate Tax is paid by the estate and not by the person who inherits the property. What this means is that the tax must be paid before the entire estate can be distributed to heirs.
2. Can the Federal Estate Tax be Reduced?
Short answer to this question is yes. By using Estate Planning attorneys who are knowledgeable in creating one or more Living Trusts a person’s estate can be lowered so that it falls below the $5.45 million exemption level existing in 2016. If, due to a change in the law, the exemption level is lowered, attorneys who understand and know how to create and fund Living Trusts will be in much greater demand.
3. When does the Federal Estate Tax Have to be Paid?
According to the IRS an estate tax return (which includes the payment) is due nine months after the date of a person’s death. A six month extension is available if requested prior to the due date and the estimated correct amount of tax is paid before the due date.
If you have any questions related to the Federal Estate Tax or how this tax can be eliminated or reduced in your Estate, please feel free to contact us so that we can answer your questions and help you with your Estate Planning. Call us toll free at 877-232-6101 or 208-232-6101 for a consultation with Lane Erickson and the Racine Olson team of Estate Planning attorneys in Idaho. You can also email Lane Erickson directly at lve@racinelaw.net. We will answer your Idaho Estate Planning questions and will help you solve your Idaho Estate Planning problems.
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