What happens to my taxes after I die?

What happens to my taxes after I die?

When you die, your estate (the property and assets you leave behind) may be subject to federal estate tax. The federal estate tax is a tax on the transfer of property at death, and it applies to the value of your estate above a certain threshold, which is known as the “unified credit.” The unified credit is currently $11.7 million for decedents who died in 2021, and it is adjusted for inflation each year.

If your estate is valued at less than the unified credit, it is not subject to federal estate tax. However, if your estate is valued at more than the unified credit, a tax will be imposed on the excess amount. The tax rate for federal estate tax ranges from 18% to 40%, depending on the amount of the estate.

In addition to federal estate tax, some states also have their own estate or inheritance tax, which may apply to the assets of your estate.

If you die and leave property or assets to your heirs or beneficiaries, they will not have to pay income tax on the value of the property or assets they receive. However, they may have to pay capital gains tax if they sell the property or assets for more than the value at which they inherited it.

It’s a good idea to consult with a tax professional in our office or estate planning attorney for more information on the tax implications of your estate after your death.

Prominent Financial Consultants offers a range of services to help our clients succeed, and we would love the opportunity to discuss how we can help you. If you would like to schedule an appointment with us, please schedule a free 15 Minute Financial Clarity Call so that we can learn more about your needs and goals.