Does my Family Have to Pay my Estate Taxes?


Estate taxes have been in the news over the past year, and the 2017 Federal estate tax exemption is now $5.49 million.  The Federal estate tax exemption was made permanent in 2012, and it is adjusted each year for inflation resulting in $5.49 million for 2017.  The federal estate tax truly only affects the richest families in America.  Every person can pass on up to $5.49 million without any taxes needing to be paid.  But if taxes do need to be paid, who actually pays estate taxes?  Do your heirs or beneficiaries, those who receive an inheritance, have to pay it?

Actually, the estate itself pays estate taxes.  When a person dies, the executor of the estate is named when the estate is probated, the legal process that administers an estate.  The executor is in charge of gathering up the estate’s assets and distributing them in accordance to the decedent’s Will. Depending on how much a person owns at his or her death, there is a possibility that an estate tax may be due.

Prior to distributing the assets of an estate, the executor of the estate must pay all estate taxes owed. This becomes important where you have an estate of mostly real estate and little cash. They must file a federal estate tax return within a specified time, normally nine months from the date of death, if the estate exceeds the current Federal exemption.

Unless an extension is requested, in most cases, the full tax amount and cash payment will be due within nine months. In the event that one dies with a large amount of real estate and little cash, the executor may be forced to liquidate some of the real estate assets to obtain the cash needed to pay the taxes.

The estate tax, along with any of the other debts of the estate, must be paid before heirs receive their inheritances.  An estate planning attorney can work with you to ensure that your estate has not only addressed any estate tax burden, but to ensure that you have estate planning tools in place to provide liquidity for an estate.

If you have more questions about estate taxes, contact our office today!

Author Bio

Catherine Hammond is the CEO and founder of Hammond Law Group, a Colorado-based estate planning law firm she founded in 2005. With a strong focus on protecting families from the legal consequences of disability and death, she creates comprehensive estate plans that minimize taxes, costs, and government interference.

A native of Denver, Catherine completed her undergraduate studies at Coe College in Iowa, and her Juris Doctorate from the University of Denver College of Law in 1993, concentrating on estate planning, tax, and mediation. Catherine is a member of various professional organizations, including WealthCounsel, ElderCounsel, the National Academy of Elder Law Attorneys, the Colorado Springs Estate Planning Council, and the Purposeful Planning Institute. Beyond her legal expertise, Catherine provides transformational coaching to support clients and their families through life transitions.

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