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.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.