Death and Taxes – Estate Tax Realities

We hope none of you are planning on dying anytime soon, but the reality is that we all go at some point.  For farmers and ranchers who own land that will be passed on to the next generation, a little planning, and some background in inheritance taxes could make it a little easier on your offspring.  Some people have given estate taxes the nickname "Death Tax" which sounds pretty scary.  So, I thought I'd check to see how deadly estate taxes are. According to the Tax Policy Center, very few people end up paying federal estate taxes.  In fact, only 1.4 out of every 1,000 estates will pay something on the value of their estate in 2013.  This is because the tax is only levied on the portion of the estate that is over $5.25 million per person.  So, if you and your spouse have an estate worth, for example, $11 million and you happen to die at the same time, your heirs will pay a tax on $500,000. If you're among the 3,780 estates in the United States that will owe federal estate taxes this year, you can expect to pay an effective tax rate of 16.6% on anything over the exemption amount.  So, in the example above, your heirs would pay a total of about $83,000.  This is well below the top estate tax of 40%. Few if any heirs pay that amount because it is possible to shield large portions of the estate's value through a variety of deductions. The estate exemption of $5.25 million per person is as high as it is in part because of concerns expressed by family-owned farms,

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One thought on “Death and Taxes – Estate Tax Realities

  1. So glad to see an article on estate planning on your website. As an estate planner myself, I know it is so important to think about estate taxes and, if necessary, properly structure your estate during your lifetime to avoid paying unnecessary taxes at death or, in the extreme case, to avoid having to sell the family farm to pay those taxes. Thanks for the great article!

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