Estate and Gift Tax FAQ

Questions:

• Will my estate have to pay federal estate tax after I die?
• What is the tax rate for taxable estates?
• Are there ways to avoid federal estate taxes?
• Can't I just give all my property away before I die and avoid estate taxes?
• Do some states impose estate tax?
• Can I avoid paying state estate or inheritance taxes?

Answer:

Will my estate have to pay federal estate tax after I die?

Most estates -- more than 99% -- don't. The federal government imposes estate tax at your death only if your taxable estate is worth more than $5.12 million for deaths in 2012 or $5.25 million for 2013 deaths. Assets left to a surviving spouse (as long as the spouse is a U.S. citizen) pass free of estate tax, no matter what the value. This rule became applicable to same-sex married couples in June 2013, when the U.S. Supreme Court struck down the federal Defense of Marriage Act as unconstitutional. Assets left to a tax-exempt charity are also exempt from estate tax.