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Inheritance Tax Texas
You have probably worried about whether your estate will be liquid enough to pay federal estate taxes you owe after your death. You obviously do not want your family to have to sell property in order to pay those taxes. Fortunately, not everyone is affected by the estate tax after their death because only a certain amount of a person’s estate that is not exempt from taxation. See also…Inheritance Lawyers in Texas.
What Is Federal Estate Tax?
The federal estate tax is a tax on property (cash, real estate, stock, or other assets) transferred from deceased persons to their heirs. Estate tax is only levied on property that exceeds $5.49 million per person which means that estate tax for a couple is $10.98 million. The taxable estate is the estate that remains after funeral costs, debts, and assets transferred to a spouse from the fair market value are deducted. In most cases, estate tax is only charged on large inheritances that are transferred to a small group of wealthy heirs. You should consult an attorney if you want to know whether the assets you want to pass to heirs could be taxed after your death.
Does Texas Have Its Own Estate Tax?
Texas is one of the states that do not collect estate taxes. In fact, only New Jersey, Nebraska, Maryland, Kentucky, Iowa, and Pennsylvania collect estate taxes. The only types of taxes that apply in Texas after a person dies are income taxes, gift taxes, property taxes, and federal estate tax. For example, you may need to file an income tax return if the decedent would have needed to file one if they had not died. An experienced estate planning attorney can help heirs or loved ones of the decedent to identify any taxes that may need to be paid.
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Gift Taxes In Texas
The law considers something a gift if ownership changes without the receiver paying the fair market value for the property received. However, in Texas, there is no such thing as an inheritance tax or a gift tax. But there is a federal gift tax that people in Texas have to pay. You can give a gift of up to $15,000 to a person without having to pay a federal gift tax. There is no requirement for you to pay gift taxes for a gift that you give your spouse and also for gifts that you give charities or political organizations. What this means is that a large majority of Texans will not find themselves in a situation where they have to pay a federal gift tax. Always talk to an estate planning attorney if you intend to write a Will, create a trust, or give a gift of a substantial value.
Qualified Terminable Interest Property Trust
You can create a qualified terminable interest property trust during your lifetime to provide for the care of your surviving spouse after your death. This kind of trust can protect your assets from both federal and state taxes upon your death while at the same time providing income for the surviving spouse. You can also use a QTIP to guarantee that money goes to children of previous marriages instead of your current spouse.
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