Not every estate will be required to pay federal estate taxes because it applies only to those estates valued at over $12.06 million in 2022. Likewise, not every state assesses its own estate tax. However, if your assets have appreciated a lot over time or if you do live in a state with its own tax, you need to share that information with a qualified lawyer to create an estate plan.
Both federal and state taxes, where applicable, are assessed on the fair market value of the estate, which is different from the value of what the deceased person originally paid for their assets. This means that any appreciation in those assets over time are taxed and this can protect against being taxed on peak values that might have dropped since. For example, if a person purchased a piece of real estate that was bought for $3 million, but its current value in the market is $1 million, that second amount will be used to determine its fair market value.
This makes it extremely important for an estate executor to understand the implications of fair market value, and to hire a probate lawyer if necessary to help guide them through the process of obtaining fair market value on all of these items.
Fair market value is also important when an executor is tasked with selling assets inside the estate because attempting to gift these assets or sell them for too low a cost to beneficiaries or friends of the deceased could be problematic and could lead to challenges against the executor’s service in their role. In many cases an executor chooses to work with an outside professional, such as a probate lawyer to guide them through this process and to answer questions.
If you want to begin working on your Pasadena estate plan, contact an attorney with experience in the field.
