At Schwartz, Fang and Keating, P.C. we’re here to help you with all of your estate planning needs and answer any questions you may have. When planning your estate you will come across the topic of estate tax—but how familiar are you with the estate tax? In this blog post we have listed the 5 most important facts our estate lawyers think you should know about estate tax.
Estate tax is a tax on the estate, or the property (cash, real estate, stock, or other assets) transferred from the deceased to their beneficiaries.
According to the Joint Commission on Taxation, only 2 out of every 100 estates will have to pay federal estate taxes.
This 2 out of 100 is comprised of only the wealthiest estates. These are the only estates that will pay federal estate tax, because the tax is only applied to the portion of an estate’s value that exceeds a set exemption level. In 2015 that number was set at $5.43 million per person or roughly $10.86 million for a married couple.
For more information on exactly what estates will have to pay estate tax read our blog post here: “Is Every Estate Subject to Estate Tax?”
While most people see taxes as wasted money out of their pocket, they do of course have important value in providing revenue to run the country, and therefore stability to a nation. Under our current tax laws, over the next 10 years federal estate tax will generate about $246 billion dollars, according to CBO. Note that this number reflects only 1% of the total federal revenue within this time frame.
The U.S. has notoriously high taxes overall. Compared to other countries, the United States taxes estates at a lower rate and higher income bracket than just four other counties: Japan, South Korea, and France, which all have higher inheritance and estate tax rates that the U.S.
However, when the Organization of Economic Co-Operation and Development ranked its members, 27 out of the 34 countries levied relative forms of estate, inheritance, and gift tax. That being said, the U.S. was noted as coming in below average in total payout of all government estate, gift, and inheritance taxes.
States within the U.S. levy their own taxes on estates, gifts, and inheritances. The taxed income bracket is actually lower than the Federal– for 2015 the amount has been set at $3,125,000. That means that the state taxes an estate that is valued about two million less than the Federal.
To discuss your options for paying or perhaps avoiding estate tax within your legal allowances contact the New York estate planning lawyers at Schwartz, Fang and Keating, P. C. For more information and answers to common estate tax questions click here.