The Estate Tax As Outlined By

Those wishing to know the exact definition of IRS estate tax rules according to the IRS can view the details on the IRS website. In short, the section describes estate related taxes as a tax on a person's right to transfer assets or property at the time of death of that individual wishing to exercise such rights. The transfer includes a total accounting of everything a person owns or may have an interest in at the time of death. The IRS provides an easy to use form in PDF format (Form 706) for this purpose.

The key to understanding the value of such items is that it is determined based on fair market value and not necessarily the amount paid when originally purchased. When all items are combined and totaled a figure is derived that is know as the “Gross Estate.” The Gross Estate will typically include everything from business interests to securities and cash as well as real estate and trusts among other items as defined by the Internal Revenue Service.

Once the Gross Estate has been determined there are a number of deductibles that can then be considered in order to arrive at the “Taxable Estate.” Common deductions include everything from estate administration expenses to real estate mortgages and a variety of other debts including assets that pass to charities. Once the actual net amount has been calculated any taxable gifts are included in order to derive actual tax owed. This amount is then reduced by any available unified credit as described by the IRS. Larger estates typically will require the filing of an estate tax return. Smaller and simpler estates do not require filing an estate tax return.

As of 2011, estates of decedents survived by a spouse may choose to pass unused exemptions to a surviving spouse. For detailed instructions related to this information visit the IRS website to read more about Form 706. For the general estate taxation rules as described here visit the IRS Estate Tax page. The IRS provides a wealth of information throughout its site for anyone interested in learning more about IRS estate tax rules. Silver Rock Partners is not a tax consultant and recommends that clients and prospective clients seek out the assistance of a tax accountant or tax attorney for further clarification. For the latest changes in IRS rules affecting estates visit the Silver Rock estate planning blog or the Silver Rock Twitter page. Silver Rock Partners provides a wide array of high-net-worth estate planning for exclusive clients with specific goals and requirements. Contact Silver Rock here to learn more.

Published 7.11.15 MGB/SRP