Estate taxes, also called death taxes, are levied against the estates of people who have passed away. Most people don’t really have to worry about federal taxes because the IRS exemption is pretty high. Some states have these taxes too, and the exemptions are a bit lower. If you are responsible for transferring a large estate to heirs, it might be a good idea to decide if these taxes will impact you or not.
The IRS offers an exemption of over five million dollars, so most folks really don’t need to concern themselves with federal taxes. In 2015, the exemption was $5,430,000. In 2016, it will be $5,450,000.
The states that collect death taxes have lower exemptions than the federal government does. Typically, people who either lived in these states or owned property may be subject to these taxes. For example, if your grandmother left you valuable property in New York, you may be subject to state estate taxes even if you live in Texas. Since the rules for these vary by state, it’s important to consider tax laws in any state that collects them.
At Trusted Senior Specialists, we can speak with you about life insurance and annuity products that may help avoid inheritance taxes: 1-855-474-6234 or schedule an appointment here.