Taxpert Education on Estate TaxesEstate taxes are imposed by the government (both federal and state) and allow you to transfer property to others when you die. Your representative, usually called personal representative or trustee, has to determine the value of everything you own when you die. This includes cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. The total fair market value of these items is called your Gross Estate and taxes may be owed depending upon how large this number is when you die. Once this value is calculated, some deductions are allowed in determining your Taxable Estate. These deductions include debt, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify. For 2006 through 2008, the value beneath which a federal return need not be filed is $2,000,000. Please note that some states have different filing rules than the federal government so you may need help from an expert to determine if you have to file with your state even if you don't file with IRS. The gift tax is a tax imposed on you while you are still living. It taxes the transfer of property from you to someone else while receiving nothing, or less than full value, in return. The tax applies whether you intend the transfer to be a gift or not.
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