An estate tax, according to the IRS, is a tax on your right to transfer property after your death. Estate taxes can apply in case where the deceased had a concrete estate plan already or even in cases where the deceased did not have an estate plan. In actuality, the estate tax is paid by the recipient of the inheritance rather than the deceased themselves.
It is argued by many that estate taxes are highly unnecessary. This because, presumably, this property had already been taxed to the original owner in their lifetime. Another question frequently brought up is regarding why hard earned property owned by a person is taxed simply because the owner has passed away. On the other hand, it is pointed out that estate taxes simply help in reducing economic inequality and that it’s generated revenue helps governments to pay for necessary public services on different levels.
There are various forms of estate taxes. Some apply directly to the property owned by the deceased while others concentrate on the receivers of the estate. For instance, some states impose estate taxes on the property of the deceased and the amount that is imposed is dependent on the value of the property or even the relationship of the recipient with the deceased. That is why it is important to be well versed in the federal estate taxes in order to tailor your estate plan in such a way that it minimizes taxation. For example, one type of estate plan allows a person to create an account dedicated to providing school tuition to another person. This type of account tends to avoid gift taxes.
If you have further questions about how estate taxes work, you may want to contact an attorney. A skilled attorney would help you know more about your rights and will assist you in creating an estate plan that best suits your needs.