Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: I have a client who is doing estate planning. The client has net assets worth $10 million, with a farm making up $9 million of net worth. If the farm is left to charity, is its value included in the client’s estate for federal estate tax purposes?
Answer: A taxpayer’s gross estate consists of the fair market value of all assets in which the client has an ownership interest at death.
To arrive at the value of a decedent’s taxable estate, certain deductions are permitted against the value of the gross estate, including:
- The client’s share of debt against assets included in the gross estate
- Certain final expenses
- Certain expenses associated with settling the estate
- The value of qualified charitable gifts
In the example, the gross estate would include all the value of the client’s assets–$10 million. The estate would be entitled to a deduction of the amount left to a qualified charity–$9 million in the example. That would make the taxable estate $1 million.
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