What are estate taxes and does everyone have to pay them? Some other terms that are associated with these are inheritance or a death duty.
It is a tax that comes with the death of an individual. If the individual that has died owned any property, then there is a fee on the total value of the property owned that must be paid.
The difference between inheritance and estate fees is that inheritance must be paid by the beneficiaries of the estate while estate fees must be paid by the personal representatives of the person who died. This may vary from country to country but it is basically the same thing and carried out the same way.
In some states, there are a few differences between how this is done. For example, in Iowa, the inheritance is exempt if the estate is passed onto certain people.
This includes a surviving spouse, children, grandchildren, parents, grandparents, or other relatives and descendants. Depending on the type of relationship that the beneficiary has to the deceased, the rate will vary on how much they have to pay.
This may not sound fair but there is a good reason for you to pay an estate tax. It is basically a fee for transferring the property value from one person (the deceased) to another (the beneficiary) if it was not done before they died.
Some states such as Kentucky impose both an estate and an inheritance tax on the property. Even though death duty means the same thing as estate and inheritance fees, it is not used as frequently anymore because it is no longer the correct legal term so it was changed to estate duty.
You are allowed to give a cash gift (transfer the value of your over to your beneficiary while you are still alive) of up to about twelve thousand and five hundred dollars every year without being taxed on it. If you continue to do this every year and slowly give away your "estate" in chunks, then it will save your descendants from having to pay anything once you die.
Transferring funds this way saves you some money and them money as well, but takes a lot more time and needs to be planned out carefully. You can also make installment payments on your property with an interest fee over the period of about fourteen years or so.
This installment program is for the descendant who inherited the land and must make a payment on it. They have to make the first payment within nine months in the United States to the Internal Revenue Service (otherwise known as the IRS).
The amount of the payment is dependent on the current market value of the land. The heirs may file an extension if it cannot be paid right away.
You have to get the government form seven zero six from the Internal Revenue Service and fill it out completely including information about the death and finances of whoever owns the land. Usually you need to attach the death certificate, appraisal copies, the will or trust, copies of any litigation documents that may involve the estate, and any other assets or near date of death transfers.
Next you will need to fill out the form called four seven six eight which will request installment payments. You have to send in a letter attached to this form explaining why you need to pay the fees in installments and what kind of payments you would like to pay.
Fill out these two forms before your nine months deadline to give the Internal Revenue Service enough time to decide what to do in your case. After the nine months pass by, you will no longer be able to file for an extension and will have to pay the entire tax all at once.
Remember that interest is going to be charged on any fees that are paid late (past the due date) and this applies to any payments that are paid in installments or have extensions. Every once in a while, the laws do change so make sure that you keep up to date with them.
Author Resource:-
Jack Landry has practiced law in California since the 80s and lectures at many prestigious universities across the country. He has written hundreds of articles about life insurance lawyer San Francisco and related subjects.
Contact Info:
Jack Landry
JackRLandry@gmail.com
http://www.lifeinsurance-law.com
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