Three Surprising Assets That Are Taxable After Death
As the saying goes, there are only two certainties in life: death, and taxes. Because of this, people often plan how their estates are going to be distributed among their families. They will also plan out how they can lower the amount of taxes they are going to have to pay. However, with so much to look into, it can be easy to miss a few. Therefore, the following details three surprising assets that are taxable after death.
Trust Assets May Be Considered Taxable
Most parents who have the financial means will create a trust for their child for when they both pass on. This is done to protect not only the family fortune but also to make sure their child is taken care of, especially if they are underage. However, because this isn’t a purchase or gift, it can seem like it shouldn’t be taxed. Unfortunately, this is not true. According to trust administration lawyers in Las Vegas, a trust asset will often go into consideration and may be included in the gross estate if you have chosen to have specific rights over the trust.
When married couples decide to create a will, they will often leave a certain amount of money to them. Although the money isn’t taxable right away, it will be once the spouse has passed away (that’s if they haven’t gone through it all.) Now, no taxes on this only applies when your spouse is a U.S citizen. If you are married to a non-U.S. citizen, the money will be taxed as the IRS will be a concern that they will take the money back to their country of origin, thus depriving the United States of collecting its taxable share.
Gifts Even Given in Life Are Taxable After Death
When a person files for tax exemption, they will often be asked to provide the IRS with a certain number. Often, elderly parents will take this time to give their children a large amount of money to avoid death taxes but will keep the same number on their application. This, however, does not work. If you have filed for $20 million in tax exemptions and give $10 million to your children, then you no longer have $20 million worth of exemption. So when you eventually pass on, the first will be added to the tax calculation.