estate tax

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Related to Estate taxes: State estate tax

Estate tax

A federal or state tax imposed on an individual's assets inherited by heirs.

Estate Tax

A tax on the assets a deceased person leaves behind. These assets include all personal property, real estate, securities and other things. In the United States, the estate tax is applied to the value of an estate that remains after all the debts of the deceased are paid, if the value of the estate exceeds a certain amount, which is always over $1 million. The estate tax should not be confused with an inheritance tax, which is a tax on the income one receives from an estate.

estate tax

A tax on the estate of the deceased before any distribution is made to the heirs. A federal unified gift and estate tax provides an exemption before any tax is paid. Although some states also levy an estate tax, it is generally at a much lower rate than the federal tax. Also called death tax. Compare inheritance tax.

Estate tax.

Your estate owes federal estate tax on the value of your taxable estate if the estate is larger than the amount you are permitted to leave to your heirs tax free.

That amount, which is set by Congress, is $2 million for 2006, 2007, and 2008 and is scheduled to increase to $3.5 million in 2009.

Under current law, the estate tax will be eliminated in 2010. Without further Congressional action, the tax will be reinstated in 2011. However, modifications to the law may be made before that date.

If your estate may be vulnerable to these taxes, which are figured at a higher rate than income taxes, you may want to reduce its value. You could do this by using a number of tax planning strategies, including making nontaxable gifts and creating irrevocable trusts.

Further, if you're married to a US citizen and leave your entire estate to your spouse, there are no estate taxes, no matter how much the estate is worth. However, estate taxes may be due when your surviving spouse dies.

You may also face estate taxes in your state.

estate tax

A tax imposed on the value of the estate of a decedent.The conceptual justification is premised on a peculiarly American notion that it is undesirable for generations to accumulate wealth by passing it to each other in a manner similar to that of English aristocracy and that each generation should make its own mark and earn its own way. As a result, it is considered advantageous to remove wealth from each generation by way of estate taxes and use the money for the common good.For details,see Publication 554,“Survivors,Executors and Administrators”available at the IRS Web site,www.irs.gov.

References in periodicals archive ?
The need for effective estate planning, particularly the role of permanent life insurance, continues to burn brightly, despite the uncertainty surrounding federal estate taxes.
Full funding would prevent "wasting" the estate tax exclusion amount of the first deceased spouse, which could result in higher estate taxes upon the death of the surviving spouse.
216(a)(1), tenant-stockholders can deduct their share of real estate taxes, because they are taxes described in Sec.
Some have already "decoupled" their estate taxes from the federal tax, and it's likely more of them would if the federal tax were repealed, he said.
There is no estate tax deferral and the estate taxes are still due within nine months of the date of death, so the "estate" part of the estate/IRD problem is not addressed.
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.
This area of discussion is much more complicated and the tax laws on federal estate taxes are always changing.
There are two provisions in the law that can help minimize federal gift and estate taxes.
We want our grieving families to be spared from further anguish in paying high estate taxes which often delay the distribution of the assets to the heirs,' Angara said.
5 million testamentary credit shelter trust generating Illinois estate taxes of $128,519 (versus $209,124 if a $3.
IRC section 216, however, allows tenant-stockholders to deduct a proportionate share of real estate taxes paid by a cooperative housing corporation (coop).
In Tax Court, the parties stipulated that the N trusts would be included in L's gross estate, but left it to the Tax Court to decide whether the resulting estate taxes were payable from N (the trusts that generated the tax) or a revocable trust (R) created by L three days before he executed his will.