Getting Married > Taxes 99 Problems But Estate Tax Ain't One

Team PV

“I wrote a will already. Why do I need to worry about taxes if my family is getting whatever assets I have left?”

That sorta famous saying about death and taxes? Bet you didn’t think it meant dealing with taxes after you’re long gone.

The estate tax is a tax on inherited assets that exceed a specific limit set by Uncle Sam. The federal government dips into your gross estate- the total value of your property and assets at your death, minus any liabilities, like funeral costs, any remaining debts, and costs related to administering your will.

If you’re like most people, your household may be among the 99.8% of estates not affected by federal estate taxes at all: this past year, Uncle Sam’s limit was $5.43 million over your lifetime without your heirs needing to pay tax. And that’s not including contributions to a trust, setting up a cushy 529 account for your child, or other cash shields(*cough* loopholes) that you may have set up. Beyond that $5.43 million, the tax rate skyrockets to 40%.

So why are we discussing the estate tax? Sure, if your startup goes balls to the wall in an IPO, it could very well affect you one day. But if you don’t regularly update your personal balance sheet and know your net worth, you really set yourself up for a surprise from Uncle Sam when it comes to your gross estate.

If you did the smart thing and wrote out a will (of course you did) your will’s executor must file a state estate tax return within nine months of your death. Though the value of your assets is determined on the day of your death, sometimes the state will allow the executor to pick a separate valuation date. Even if your estate doesn’t owe any tax and your assets are going to your surviving spouse, you still have to file that return. 99 problems but estate tax ain’t one.


Photo: Modified from PTMoney

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