When someone passes away, the last thing you want to consider is the tax man. While it’s not a pleasant task, someone has to handle the debts and liabilities of an estate, including any remaining tax burdens. That someone is usually the executor, and if you find yourself in that role, seeking legal assistance with the job can be a good idea. If you are, instead, the person planning for the estate, then an estate professional can help you do some work now to relieve your administrator of some future burden.
In either case, you should understand what tax requirements might apply to your estate. One requirement for any estate is that a final income tax filing be submitted. If a person had any income in their last or partial year of life, then an income tax return needs to be filed with all appropriate entities come April.
A second issue many people in New Jersey have to contend with is the state estate tax. This only applies if the estate is worth $675,000. That means the value of all assets in the estate total that much after debts and other obligations are paid. While it seems like a lot, a house and a few other items of value could easily exceed the threshold, opening the door to state taxes.
Federal estate taxes have a much higher threshold that is less likely for many people to meet. Even so, it’s a good idea to ask your estate lawyer if federal taxes are something for which you should plan. When it comes to estate matters and tax law. there’s no such thing as too much planning.