Will You Owe Estate Taxes?

Estate taxes can be a complicated subject especially as they are often a discussion in public policy. Approximately 0.2% of US adults who passed away in recent years owed estate taxes. In 2022, the estate tax is only triggered by those people who have an estate with assets in excess of $12.06 million.

Estate taxes will be charged on the fair market value of a person’s assets when they pass away if their estate is larger than this amount. This is why many people take an opportunity to consider all of their different assets by creating an inventory list and discussing their planning options with an estate planning lawyer.

For calculating estate taxes, this begins with totaling the fair market value of assets like insurance, securities, real estate, annuities and business interests to determine the gross estate. Not all assets are included in a gross estate, such as life insurance policy proceeds so make sure to subtract those. There are also allowable deductions for items excluded from estate taxes, such as funeral expenses, state administration taxes, property that passes directly to surviving spouses and more.