Careful estate planning includes understanding your tax consequences and minimizing your estate taxes. Generally, the Internal Revenue Service (IRS) uses the value of your “gross estate” to determine your tax liabilities. The fair market value on the date of death determines a decedent’s estate tax liabilities. Your gross estate typically includes your probate property and other non-probate property. It does not include specific types of property, including spousal property jointly owned with a surviving spouse. Furthermore, it does not include some lifetime gifts. You can also reduce your estate taxes by claiming the following top five deductions:
- Mortgages and excludable debts owed on the date of the decedent’s death.
2. Any expenses paid by the decedent’s estate or executor to administer the decedent’s estate.
3. Charitable deductions, if paid to qualifying charities.
4. Marital deduction for a surviving spouse for property jointly owned.
5. Any losses incurred by the estate during administration of the decedent’s estate.
Talk to your accountant or tax planner to see if any of these deductions apply.
Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.