The administration of a wealthy person’s estate in New York is a big undertaking. Executors must be aware of the current estate tax laws, and they must determine which IRS forms they are obligated to complete with the deceased person’s final tax filing.
Right now, an estate is considered taxable by the federal government if its assets are worth $5.43 million or more. The $5.43 million exclusion amount is indexed for inflation and adjusts each year. In 2012, a new estate planning tool was introduced that allows married couples to pass their unused exclusion amounts to each other when they die. With the new law, a married person could essentially exclude $10.86 million from taxation if they use their deceased spouse’s entire exclusion amount.
If a deceased person had an estate that was worth more than the federal estate tax exclusion amount, the decedent’s executor will need to complete IRS Form 706 . On the form, the executor will report the estate and generation-skipping transfer taxes. The current federal estate tax rate is 40 percent while the generation-skipping transfer tax rate is an additional 40 percent. A generation-skipping transfer tax may kick in if the testator left a chunk of their estate to their grandchildren or unrelated people who are at least 37.5 years younger than them.
A person who has been named as a testator under a wealthy person’s will may want to work with an attorney. When a significant amount of assets are at stake, there is the potential for disputes to arise if beneficiaries believe there is a problem with the estate administration . An attorney may be able to help the executor in the performance of all required duties.