I do plan on setting up a living trust very soon as we just had a baby but I was curious... if I die tomorrow, I know my wife inherits everything but will she also have to pay taxes on my net worth?
2007-08-14 18:27:48 · 5 answers · asked by Rez 3 in Business & Finance ➔ Taxes ➔ United States
Hmmmm. I disagree with all the above responses. The first 3 are simply wrong.
Transfers between spouses are not subject to estate tax as long as they are both citizens. They are covered by the Unlimited Marital Deduction. Note, the "Unlimited" part.
As to a Living Trust, it has virtually no impact on the taxation of transfers between spouses. In fact, if you are young enough to be having a baby, I question the utility of a Living Trust.
A Living Trust primarily avoids probate, protects your estate plan from the public, and mitigates competency problems typically associated with aging. Let's break that down.
Unless you live in a state with high statutory probate, then the cost savings is likely negligible. Besides, a Living Trust only controls the assets that you change the title to it during your life.
As to privacy. Unless you are famous or ultra wealthy or a politician, very few people care to go to the court house to see your will.
A Living Trust is very beneficial for senior citizens. It can provide them with continuity of asset management, expense payment, etc. if one loses legal capacity.
2007-08-15 03:43:16 · answer #1 · answered by CPA/PFS 2 · 2⤊ 0⤋
No, but your estate might, at least at the Federal level. If your estate is worth more than $2 million net then some estate tax will be due, except any portion going to your wife as there is an unlimited exclusion for spousal transfers. State inheritance and estate taxes are all over the chart. Some are significant and some have none at all.
Consult with a qualified estate planner if you have a significant estate to contend with.
2007-08-15 08:34:49 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Unless your estate is over $2 million, there wouldn't be any federal tax now. The limit increases for awhile, then drops again in something like 2010 unless congress changes the rules again.
2007-08-15 02:20:02 · answer #3 · answered by Judy 7 · 0⤊ 2⤋
Your estate would not owe estate tax unless you are filthy rich. Ask whoever set up your living trust to give you a complete rundown. That's part of what you will be paying for.
2007-08-15 01:47:56 · answer #4 · answered by Anonymous · 0⤊ 4⤋
yes, htere is inheritance tax or estate tax even when it is a surviving spouse, The government steals from you even when you are dead.
2007-08-15 01:37:43 · answer #5 · answered by Anonymous · 0⤊ 4⤋