Accounting Articles > Estate Planning:

Estate inheritance planning

The problem here is making sure that your assets actually go to your heirs, rather than being sold to cover estate taxes. Most people don't want their life's accumulated assets to go to the government in taxes. Let's use an example to illustrate this on-going problem.

In our example, you have a rather mid-sized estate, with assets as follows:

For our example, let's say that the estate tax credit is currently $2,000,000. All assets left in an estate over that limit are generally taxed at about 55%. In this instance, the estate will have to pay 55% of $1,900,000 or $1,045,000 in tax which is due no later than exactly nine months after the date of death.

There's only $400,000 sitting in cash or investments to pay this tax. Where is the executor going to get the additional $645,000? Normally, by the time we find out roughly how much will be due, there's very little time left before we've missed the deadline and The Internal Revenue Service starts charging penalties and interest.

What will normally happen is that your heir starts selling off the assets that you wanted them to have in order to pay the estate taxes.

What can we do to avoid this?

Call our offices today. As highly experienced and recommended CPA's and Enrolled Agents practicing in The Chicagoland Area, we have developed answers to these problems. Don't try to handle this yourself. Let's make sure that your life's work will benefit your loved one's rather than Washington. If you wait too long, little or nothing can be done. Call or e-mail one of our specialists today.