What are estate taxes?
Your estate is considered a separate tax-paying entity by the IRS. Your personal representative must file and pay income tax on any income your estate receives (e.g., interest from bonds or dividends from stock).There are many factors that you should consider when designing an estate plan. One of the most significant is taxes. The act of giving away your property may be subject to taxes on the federal level, state level, or both. These tax liabilities may be the largest potential expenses your estate may have to pay. This means the property that you want to go to your loved ones may go to the federal government and your state instead. Understanding what these taxes are, how they work, how they may affect your estate, and how they can be minimized is vital to implementing a successful estate plan.