Losing a loved one is one of the worst things we deal with in the course of our lives. Unfortunately, to compound pain with frustration, there is an additional layer to losing a family member: taxes.
For hundreds of years, the government has required remittance by the families of the deceased into public coffers.
Originally designed as a tithe from an incoming noble to a lord, in academic circles it is considered to be a method of prohibiting a noble class from arising.
Whether or not that is effective, whatâ€™s for certain is that estate and probate taxes, as they are commonly called, are difficult to understand and even more difficult to enforce.
Upon the death of a loved one, most people have a living will that describes how the deceased wishes their assets to be distributed upon their demise.
If married, many wills grant most of the assets to the spouse with a few select items willed to sons, daughters, or grandchildren.
That is because in the United States, one spouse may gift the other an unlimited amount with no tax implications.
On a side note, this was a significant part of the debate when deciding whether or not to legalize same-sex marriage.
Many wills are very short for this reason; if youâ€™re just going to give everything to your spouse, in effect you are simply stating that everything remains in place!
If there is no living spouse, the situation becomes more complex. As of 2013, in the United States $5.25 million of the estate is excluded from the taxable estate.
Past that amount, 40% is due to the government. Wait! you might say, thereâ€™s no way my grandfather has more than 5 million dollars!
While that may very well be true, the estate is calculated based on all of their assets. Many people hold investments such as real estate or securities which may be unknown to younger family members.
In addition, many collectorâ€™s items such as paintings and antiques may be worth a considerable sum of money.
It can be quite a shock to discover that a humble relative had a taxable net worth of seven million dollars!
Once the net worth has been established, the family must determine the tax amount and how to liquidate assets, if necessary, to pay the estate tax.
For example, letâ€™s assume that a deceased grandmother had $7M in assets. That results in a total tax of $700,000.
It is unlikely that this person had a bank account with a million dollars in it, so it will be necessary to sell off some assets in order to meet the tax burden.
A qualified attorney will draft a will while the person is still alive that takes care of this contingency.
For example, the grandmother may have arranged for certain real estate holdings to be turned into highly marketable securities that can be easily sold to meet the estate tax.
This process is done carefully by estate accountants, and formalized by attorneys experienced in the field.
When you need an experienced attorney who will handle your wrongful death case himself, ensuring that the legal system treats you and your family fairly, call the
Millea Law Firm.
Matt Milleaâ€™s focus is on personal injury and wrongful death. He will work directly with you, giving you individual attention and personally preparing your case.