When you lose a loved one in New York, their estate is still responsible for paying debts and taxes. The executor of their estate will have to figure out how to pay the estate taxes before distributing properties to the heirs. Technically, you won’t have to pay anything, but the taxes could affect the value of the property that you receive.
Do you have to pay inheritance taxes?
The heirs don’t have to pay any taxes directly. However, the executor of the will might have to sell off part of the estate to pay the estate taxes. Under federal law, your loved ones can pass along up to $11.58 million in assets without paying estate taxes. States have different laws for estate taxes, so even if your loved one’s estate is exempt from federal taxes, the state might still be entitled to a share.
If the executor of the will doesn’t do their job properly, they might distribute the assets before paying off the estate taxes. As a result, the IRS might seize part of your inheritance to pay for the taxes. It’s important for your loved one to consider tax planning when they start writing their will with an estate planning attorney. If they don’t take taxes into consideration, a percentage of their estate might go to the IRS after their death.
Are you thinking about planning for the future?
You might not want to think about dying at this stage of your life, but it’s better to prepare yourself than die without a will and leave your estate in disarray. An attorney may tell you about your tax planning options to help you reduce estate taxes. You might transfer some of your assets to a trust or give your beneficiaries gifts while you’re still alive.