Federal Estate Tax
On behalf of David Whitlock at Whitlock Canter LLC
A federal estate tax return is required if the sum of the assets held at death plus the taxable gifts made during the life of the Decedent are more than the federal exemption equivalent ($12,920,000 as of 2023). Even though a spouse can pass an unlimited amount to his or her spouse during life or at death, the assets left to a spouse at death do count towards the $12,920,000 exemption equivalent.
It is also necessary to file a timely federal estate tax return in order for a surviving spouse to obtain the use of their spouse’s unused federal estate tax exemption (referred to as “DSUE”). In 2022 the IRS increased the filing deadline from 2 years to 5 years after the first spouse’s death.
The federal estate tax return is due and the taxes must be paid within 9 months of the date of death. A six (6) month extension may be obtained if timely and properly filed. The penalties for failure to comply with the filing requirements are substantial and special care should be taken to avoid their imposition by the Internal Revenue Service.
A deferral of the payment of estate taxes can be obtained under some circumstances (e.g. lack of liquidity to pay tax). The permission to defer estate taxes requires tax expertise. The lawyers from Whitlock Canter LLC can assist Clients in obtaining such tax deferral when necessary.