July 2017: Taxes Related to Estate Planning

By:  Norman Handler, Esquire

Published:  July 20, 2017

Everybody knows the expression, “There is nothing certain in life except for death and taxes”.  The ‘taxes’ referred to, are income taxes that are paid on earnings while alive.  But following death, your estate and your beneficiaries have to deal with numerous taxes:

  • Federal estate taxes:  A tax payable by your estate to IRS on the assets that you owned at date-of-death
  • State estate taxes:  A tax payable by your estate to the state where you lived at date-of-death on the assets that you owned at date-of-death
  • State inheritance taxes:  A tax payable by your beneficiaries to the state where you lived at date-of-death on the assets that they inherited from you as a result of your death
  • Federal estate income taxes:  A tax payable by your estate to IRS on the income earned by your estate on the assets that it held following your death until those assets are distributed to your beneficiaries
  • State estate income taxes:  A tax payable by your estate to the state where you lived at date-of-death on the income earned by your estate on the assets that it held following your death until those assets are distributed to your beneficiaries
  • Federal income taxes on your pension:  A tax payable by your beneficiary to IRS on a portion of your government pension that they receive as a result of your death
  • State income taxes on your pension:  A tax payable by your beneficiary to the state where they live on a portion of your government pension that they receive as a result of your death
  • Federal capital gains taxes:  A tax payable by your estate or by your benefiticary to IRS on the post-death appreciation of assets sold after your death
  • State capital gains taxes:  A tax payable by your estate or by your beneficiary to the state where you lived at date-of-death or to the state where your beneficiary lives, on the post-death appreciation of assets sold after your death

While not every one of these taxes may be applicable to your situation, they should all be considered when doing your estate planning.

Mr. Handler has been practicing with his firm, Handler & Levine, LLC, and its predecessor firm for over 25 years.  He regularly represents individuals, including Federal employees, in preparing their estate plans, including Wills, trusts, powers of attorney, health care directives and other estate planning tools.  Mr. Handler has been a presenter with NITP for over 20 years.