You may be wondering if you’ll have to pay estate taxes upon inheriting an an estate—or if your heirs will have to pay taxes on your estate when you die. The answer is probably not, unless you are very wealthy!
Federal Estate Tax
The federal estate tax is an excise tax levied on the privilege of transferring property at death and usually is measured by the size of the estate. For 2018, the maximum rate of federal estate tax is 40% of the value of the estate less all exemptions (approximately $11,200,000 per person indexed for inflation), exclusions, and deductions.
The following assets are included in the gross estate of the decedent (the person who has died):
- Real property (your home, mineral interests and surface interests)
- Personal property, cash, investments (i.e., stocks and bonds)
- Interests in closely held business entities (e.g., limited liability company membership interests, partnership interests and corporate stock)
- Retirement assets and life insurance
So, unless you have an estate value exceeding $11.2 million, you don't need to worry about federal estate taxes.
State Estate Tax
You may be required to pay a state estate tax depending upon the state in which you reside. Oklahoma repealed its estate tax in 2010. The federal and state estate taxes are unpopular because they are taxes on property which has already been taxed multiple times (income tax, sales taxes, ad valorem taxes, etc.).
If you have more questions and would like help getting your estate in order, please contact me, and I'll be glad to assist you.
Grayson P. Van Horn is an attorney at law serving Oklahoma residents and property owners.
Image credit: istockphoto.com/WillSelarep