M—Federal Estate Tax

One of the potential expenses of settling larger estates is the federal estate tax. It is a continuous lien on your client’s property, but its foreclosure date is yet to be determined. Proper planning involves anticipating and reducing the estate tax liability wherever possible as well as providing for payment of the tax. Unlike other expenses of settling an estate, it can be particularly burdensome in that it is generally due and payablein cashnine months after death.

The estate tax computation is not difficult, and in many ways resembles the calculations involved in determining income tax. When we file our income tax return each year, the calculations involve terms such as gross income, taxable income, deductions, and credits.

When anestatetax return is filed, we are likewise dealing with terms such as gross estate, adjusted gross estate, taxable estate, deductions, and credits.