Attorney, wealth advisor, and portfolio manager Gregory Shanaphy is a vice president of private banking and finance at UBS, New York, NY. With a strong background in investment banking, estate planning, and law Greg Shanaphy knows his way around estate tax.
Estate tax is levied on the heir’s portion of an estate only if the net value of the estate exceeds the exclusion limit set by law. It is imposed on assets left to heirs. It does not apply to the transfer of assets to a surviving spouse as that right is unlimited by law.
Estate tax is computed using the market value of assets in the possession of individuals at the time of their death. Market value will not necessarily be equal to what was paid to acquire the assets. The fair value of an individual’s property, both real and personal, is then computed to derive the gross estate.
From the gross estate, specific deductions are allowed to figure the net estate. These deductions include mortgages and other debts, asset transfers to spouses, transfers to qualified charities, and estate administration expenses.
After computing net estate, lifetime taxable gifts are added to arrive at the taxable estate. It is from this amount that estate tax is computed. Taxable estate may be reduced, however, by unified credit.
Individual states have specific tax laws that provide for estate taxes. It is important to consult an estate planning lawyer to establish an efficient estate administration plan.
Estate tax is levied on the heir’s portion of an estate only if the net value of the estate exceeds the exclusion limit set by law. It is imposed on assets left to heirs. It does not apply to the transfer of assets to a surviving spouse as that right is unlimited by law.
Estate tax is computed using the market value of assets in the possession of individuals at the time of their death. Market value will not necessarily be equal to what was paid to acquire the assets. The fair value of an individual’s property, both real and personal, is then computed to derive the gross estate.
From the gross estate, specific deductions are allowed to figure the net estate. These deductions include mortgages and other debts, asset transfers to spouses, transfers to qualified charities, and estate administration expenses.
After computing net estate, lifetime taxable gifts are added to arrive at the taxable estate. It is from this amount that estate tax is computed. Taxable estate may be reduced, however, by unified credit.
Individual states have specific tax laws that provide for estate taxes. It is important to consult an estate planning lawyer to establish an efficient estate administration plan.