Federal Estate Tax

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Federal Estate Tax

A tax in the United States applied to the value of the estate of a deceased person after all debts of the deceased are paid. The federal estate tax has a large exemption; the amount varies, but is always more than $1 million. The federal estate tax derives fairly little income for the federal government, but it is used to prevent (or at least reduce) the proliferation of dynastic wealth. See also: Death Tax.
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If the surviving spouse would eventually be subject to federal estate taxes using the lower $2 million state exclusion in the first deceased spouse's estate, the family probably would be better off increasing the credit shelter trust to $3.
Corrections: In our June/July Advance item "A Pair of Queens," we reported that Annie Leibovitz had to pay exorbitant income taxes on her inheritance from her partner; to be technically accurate, we should have said federal estate taxes.
Looking at federal estate taxes, USDA says that changes to these policies reduced the number of farm estates required to file an estate tax return as well as the number required to pay tax and the amount of federal estate taxes owed.
The credit for prior transfers allows the personal representative to claim a credit against the decedent's federal estate tax liability for federal estate taxes which were paid in another estate in which the current decedent was a beneficiary.
Lincoln Life's offering is through a rider that gives policyholders the right to surrender their universal life contracts without incurring surrender charges if Congress extends repeal of federal estate taxes through at least Jan.
Of 23 estates settled by the Farm Bureau Legal Service Plan from 1995 through 1999, only one required payment of federal estate taxes while nine estates had to pay Pennsylvania's inheritance tax.
As the law stands, families have little time to collect the needed funds: federal estate taxes are due nine months after the date of death and must be paid in cash.
Schiller, a frequent Education Foundation instructor on federal estate taxes and succession planning, notes that under current law, there are allowances in which a married couple could pass on at least $6.
Because while life insurance proceeds are generally exempt from income taxes, they are subject to onerous federal estate taxes.
Since federal estate taxes may be levied at rates as high as 55 percent, selling all or part of the property is often the only way in which family members pay their taxes.
7 million up front in state and federal estate taxes before they could get their hands on the money.

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