What it is:
How it works (Example):
Death taxes usually apply to assets inherited by heirs, but they usually don't apply to assets inherited by spouses. Death taxes on small businesses and farms left to heirs also face unique estate tax treatment.
Step-ups, which refer to an increase in the price at which anwas purchased, reduce tax bills because the pretends the of an is the when you inherit the assets. Thus, heirs can sell those immediately and might pay little or no .
Why it Matters:
Part ofis preparing for the due upon one's death, and where one lives can have a significant impact on the amount of tax his or her heirs pay.
Death taxes are not the same as probate fees, which can also cost thousands of dollars. Settling an executor fees, court fees, recording fees and attorney fees. In many cases, death taxes and fees must be paid as the estate is probated, meaning that the heirs need to come up with the money fairly immediately after a person's death. In many cases, the heirs either have to sell the assets they've inherited just to pay the taxes and fees, or they have to borrow money to do so.may also involve
Many people attempt to reduce the size of their estate while they're still alive by giving away portions of their estate. This can be done without triggering death taxes as long as the gifts are below the gift-tax exemption limit. Establishing a trust often reduces trustee (the person acting on behalf of the decedent) the authority to distribute assets immediately to the beneficiaries based on the terms of the trust. No court is involved, so there are no probate fees and no public record of the value of the estate. Many financial advisors urge clients to have trusts, especially those who live in states where probate fees are especially high or if the client owns a home or . Trusts are not for everyone, however, so it is important to seek proper financial advice.because it allows a person to transfer legal title of his or her property to another person while he or she is still alive. It also gives the