After cremations as part of the cremation services offered in Dayton, OH, your estate will be settled by your executor. Part of that settlement may be paying both state and federal inheritance taxes.
The good news is that the current estate worth on which federal taxes must be paid is very high and three-quarters of American states do not have estate taxes, so unless your estate is large, your executor won’t have to worry about inheritance taxes and your beneficiaries will get their portions of your estate as your will specifies.
However, if you have a large estate – many financial and property assets – then inheritance taxes must be paid. Payment for both state and federal inheritance taxes must be done with nine months of your death.
For large estates, the executor should hire a certified public accountant to determine what inheritance taxes need to be paid and how much has to be paid for each of the inheritance taxes. They can do the math and the paperwork to make sure that the nine-month-after-death deadline is met.
What kinds of inheritance taxes may have to be paid?
Income taxes are one inheritance tax that may need to be paid out of large estates. This tax could be for a year or two years, depending on when the deceased died. If the deceased had income from investments and business ventures, then income taxes will need to be paid. If the deceased died in January or February of the year and didn’t file taxes for the previous year, then income taxes are likely due for the previous year and the current year.
Another type of inheritance taxes comes from the date of death valuation of assets. This sounds complicated, but it’s quite simple to understand (although a certified public accountant will need to do the valuation of assets). For example, if there are stock holdings in the estate and one stock was trading at $250 per share when the deceased died and the stock is still trading at $250 a share when the stocks are sold, then there is no tax owed because there is no gain on the stock. However, if the same stock is selling for $300 a share when the stock is sold, then taxes must be paid on the $50 gain per share.
If the deceased has assets in retirement accounts such as 401Ks and IRAs, then this money is pretax money and taxes must be paid on it when the retirement accounts are cashed out. There is a way to defer tax payment on IRAs. The beneficiaries can utilize a tool called an Inherited IRA (essentially this keeps the IRA in place so it continues to grow, with annual payments for the rest of life and any residual money going to the heirs’ estates when they die) that enables them to defer tax payments after they inherit the IRA. Once an IRA is cashed out, the Inherited IRA is option is not available.
Life insurance monies are not usually taxed. However, the executor of the state needs to be assertive in making sure all life insurance policies are paid in full to the estate.
If the deceased had a lot of personal property, that will be included in the value of the estate at death for state and federal tax purposes. However, most people will find that their personal property values fall below the minimum value for taxation. That being said, the heirs will still be responsible for any local taxes, such as property taxes.
For more information about cremation services offered in Dayton, OH, our caring and knowledgeable staff at Glickler Funeral Home & Cremation Service is here to assist you. You can visit our funeral home at 1849 Salem Ave., Dayton, OH 45406, or you can call us today at (937) 278-4287.