Estate Tax

IRS Definition

The estate tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of these items is your “Gross Estate.” The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

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Estate tax is a tax paid by the estate (not the beneficiary) on estates valued over $5,490,000 (for 2017). The amount goes up to $10,000,00 for 2018. If the estate is not valued over the annual limit, an estate tax return (Form 706) does not have to be filed.

If the estate is required to file an estate tax return, it must be filed within nine months of the date of death (an extension is available). The estate tax rates for 2017 vary from 34% to 40%.

Worried about an estate tax audit? Learn how to handle an IRS audit.