Walsh & Company, P.A.

A Brief Primer on Estate, Gift and Other Taxes

The following is a brief description of some common taxes involved in estate planning.  The attorneys in our firm are experts in tax issues, and are prepared to assist with any tax issues you may encounter. See the Tax section of our firm's website.

Estate Tax:
    An excise tax on the Gross Estate of the decedent at the time of death.  Includes all property: probate and non-probate.  This is a Federal Tax with a current exemption of $5.45 million.

Gift Tax: 
    A tax on the value of a gift given during a person's lifetime.  This is a Federal Tax which has a built-in annual exclusion of $14,000.  A person may make annual gifts under $14,000 every year without tax consequences.  There is also a lifetime exclusion integrated with the Estate tax. 

Inheritance Tax:
    This is a tax against the transferee, legatee, or heir.  This tax is only applicable to certain individuals who fall outside of a specifically excluded class (usually consisting of close family members).  For those individuals, the tax is a flat 10%.  This is a State tax.  If there are several beneficiaries of which some are excluded and some are included, the general rule is that the estate should first be divided into the appropriate shares, then the inheritance tax should be deducted from each individual's share who is subject to that tax.

Transfer Tax:
    This is tax on the lifetime transfer of certain property to certain persons or entities.  Transfers of property to a Trust or Corporation will often be subject to Transfer tax.  As with Inheritance tax, close family members tend to be excluded from this tax.  This is a State and County Tax. 

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