The estate tax has also been referred to as a “death tax” and is relatively simple. Here is how the estate tax works: Generally, if in the year you pass, your estate is valued less than the estate tax exempt, whomever will be inheriting your estate will be able to avoid paying federal estate taxes. On the other hand, if your estate exceeds this exemption value when you pass, the inheritor will be responsible for paying the IRS these taxes typically within 9 months. Not only can this cause a hardship on your inheritor but, it would most likely result in them having to sell off some of your assets to pay for these taxes. However there are some exceptions, such as if you leave your full estate to your spouse, that can change how the estate tax works.
There are also ways that you can structure your estate plan, such as creating an Irrevocable Life Insurance Trust to minimize the financial burden your inheritor may have. This is why it is so incredibly important to have an estate planning attorney work through this and advise you on the best options for protecting your assets.
For the 2019 tax year, there has been only a slight increase from the 2018 figure, $11,180,000 per individual, to $11,400,000 per individual, which is significantly less than the increase from $5,490,000 to $11,180,000 in the 2018 Act.
For more information on how to safeguard your assets and structure your estate, including how to plan for paying for long term care without spending your nest egg, call our office and schedule a meeting with attorney Liz Moneymaker.
You can find the 2019 Unified Credit Against Estate Tax in the IRC Section 2010. 26 U.S.C.S. § 2010 Or on the IRS website, https://www.irs.gov/pub/irs-drop/rp-18-57.pdf
By: Lauren Kaiser