HOW THE ESTATE AND GIFT TAXES CAN AFFECT INHERITANCE
April 7, 2014
No one wants their spouse or family members to have to worry about what to do when they pass away. However, many people do not realize that the estate is required to pay taxes on property above the exemption limit that is transferred.
Transferring property to an heir while the giver is alive is known as a gift, and the tax on the amount is considered a gift tax. If the property is transferred to the beneficiary after the benefactor is deceased, then the tax that is paid is known as estate tax and is paid out of the funds that are part of the estate.
In California, the maximum property value that can be gifted does not matter. The state of California doesn't require a gift tax return to be filed at the state level. It also means that there is no longer a gift tax in California. However, the IRS still requires a gift tax return to be filed if the gift amount exceeds $13,000 a year per person.
Setting up an estate is best done by estate-planning attorneys. They can inform their clients about all of the requirements for setting up an estate. They can fill out and file the estate paperwork with the probate court in the county that has jurisdiction over the estate. They may also advise someone planning their estate on how much to distribute as gifts and what to distributed after death. It's also possible to appoint an estate attorney to be the executor of an estate.