Do you have assets or property that you want to leave to family members or friends when you die?
Does someone want to leave property to you when they die? Yippee!!
If you answered “yes” to either question, you should know a bit about inheritance and estate taxes–so you or your beneficiaries don’t have a surprise when the gift is collected. An inheritance tax is a tax paid by beneficiaries when they inherit property. In contrast, estate taxes are taxes on an estate based on the value of the property before it is given to the recipients. The good news is that Texas doesn’t impose an estate or inheritance tax.
Some beneficiaries will have to pay some taxes on behalf of the generous dead person. For instance, they’ll have to pay the final federal and state income taxes and any federal estate income taxes, as well as any federal estate taxes. Additionally, they may have to pay additional federal or state taxes.
Note: Be aware of the $15000 federal gift tax, which allows you to make an annual gift of up to $15000 without taxes. Similarly, the federal estate tax allows an deceased person to transfer assets up to $11.2 million dollars tax free. (These numbers are current as of 2019).
If someone dies with a will, the probate court will do their best to ensure that the dead person’s wishes are carried out. For an estate (the sum of all of the property) valued over $75,000, the probate court divides assets. For this process, an executor is appointed to pay the decedent’s debts and to protect the heir’s assets. If the estate is worth less than $75,000, the case may be handled outside the probate court with a small estate affidavit with the court, to claim assets and pay liabilities.
In contrast, if someone dies intestate or without a will, the dead person’s property is given to their heirs as dictated by law. These types of cases are handled in probate court.The law isn’t easy to figure out on your own, and drafting a valid will and trust require legal knowledge and skill.
The good news is that experienced wills and trust attorneys have the knowledge and expertise to assist you. Ibekwe Law, PLLC can help you understand the probate process and navigate the muddy waters of probate court. Contact them today.