Updated July 21, 2015
Estate Planning in Chicago Illinois
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:
| Family Home | $500,000 |
|---|---|
| Vacation Home | $300,000 |
| Checking & Savings Accounts | $100,000 |
| Stocks, Bonds & CDs | $300,000 |
| Business Property | $1,700,000 |
| Business | $1,000,000 |
| Total | $3,900,000 |
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.
If you are having problems with your Estate Planning in Chicago Illinois or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
Chris@AccountingSolutionsltd.com
Additional Accounting Articles and information on my firm can be found at
www.AccountingSolutionsLtd.com
Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.