Step 1: Calculate the Value of the
Gross Estate
•This is the value of all of the deceased’s assets.
•This includes life insurance, pensions,
investments, and any real or personal
property.
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Understanding the Process of Calculating Estate Taxes and Writing a Will, Slides of Fundamentals of E-Commerce
A step-by-step guide on how to calculate estate taxes and explains the importance of having a will. It covers the calculation of the gross estate, taxable estate, gift-adjusted taxable estate, and estate taxes. Additionally, it discusses the role of a will, its components, and the probate process.
Typology: Slides
2012/2013
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Step 1: Calculate the Value of the
Gross Estate
This is the value of all of the deceased’s assets.
This includes life insurance, pensions,investments, and any real or personalproperty.
Step 2: Calculate Your Taxable
Estate
This is equal to the gross value of thedeceased’s estate minus funeral andadministrative expenses, debts, liabilities,taxes and any marital or charitabledeductions.
Step 4: Calculate Your Estate Taxes
Estate taxes are equal to the gift-adjustedtaxable estate multiplied by the appropriatetax rate.
To determine the net tax owed calculate thetotal tax owed and subtract the unified giftand estate tax credit. In 2000/2001, the $675,000 estate tax transfer thresholdequaled a credit of $220,500.
Wills and What They Do
Will -- a legal document that transfers an estate afterdeath - Beneficiaries -- the people who receive your property - Executor or personal representative -- the personwho is responsible for carrying out the provisions ofthe will - Guardian -- cares for minor children and managestheir property
Wills and the Probate Process
(cont’d)
Disadvantages of the probate process
Numerous costs and fees – legal fees, executorfees, court fees – that can run to 1% to 8% of theestate value - Process can be slow, especially if there arechallenges to the will or tax problems
Why Do You Need a Will?
So state law will not dictate the
distribution of your assets - custody of children or care for those with specialneeds - To avoid a court-appointed administrator andassociated costs
The Basics of Writing a Will
(cont’d)
Wills should be stored in a safe place;however, a safety deposit box is not always agood place because it may be sealed uponyour death.
Note: Always tell someone you trust whereyour will is so it can be found upon yourdeath.
The Basic Organization of a Will
Introductory statement
Payment of debt and taxes clause - Disposition of property clause - Appointment clause - Common disaster clause - Attestation and witness clause