Estate Tax Calculation
In calculating your potential federal estate tax, you must first estimate how much you are worth. Your gross estate includes the value of everything you own (i.e., cash, securities, automobiles, real estate, business interests, etc.), including the death benefit of any life insurance policies that you own. For example:
Sample Estate
| Cash and savings | 10,000 |
| Securities and annuities | 60,000 |
| Automobiles | 30,000 |
| Personal assets (furniture, collectibles, etc.) | 50,000 |
| 500,000 | |
| Residence | 200,000 |
| Other real estate holdings | 150,000 |
| Business interests | 500,000 |
| Life insurance death benefits | 1,000,000 |
| Gross estate | $2,500,000 |
Once you've estimated your gross estate, you calculate the federal estate tax like this:
| Gross estate | $2,500,000 |
|---|---|
| Deduct outstanding debts and administrative expenses(approximately 5 percent of gross estate) | -125,000 |
| Deduct charitable contributions planned at death | -100,000 |
| Deduct assets that will pass to surviving spouse at death | -1,000,000 |
| Taxable estate (estate passing to non-spouse/non-charitable beneficiaries) | $1,275,000 |
Federal tax amount will depend on the year of death. See chart here.
Note: For other estate planning services (wills and trusts), contact an attorney or other certified professional who specializes in estate planning services.
