Q: My father just passed away. Will I have to pay estate taxes on the value of the estate?
A: Generally, the heir does not pay the estate tax. If there is an estate tax due, the estate is responsible for the estate taxes due on the gross value of the estate. This year, the estate tax exemption is $5,250,000.
Q: How do I deduct expenses from an estate to arrive at the true value of the estate?
A: The estate can deduct estate expenses from the estate itself using form 706 or it can use form 1041 to deduct expenses from the income of the estate.
Q: Can a business be passed from one generation to the next by the use of a simple will?
A: It is a really bad idea to approach business succession in this manner. If a business is passed down through a will, it could be subject to probate, a process that takes 6 months or longer. Also, details emerge in the transition process which are best dealt with during the life of the owner.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors