[Estate tax] on savings accounts?

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brandy
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[Estate tax] on savings accounts?

Post by brandy » Sun Apr 01, 2018 6:30 am

I have a bank account in a living trust. I just transferred some money into a different account, one not in the trust, that has a specific beneficiary (B). The beneficiary does not know of it yet. When I die, it's to go to the B. Will it be taxed, and how?

I also have two small insurance policies, both with named beneficiaries. Will those be taxed when they get them--or even before?
Do they claim either the savings account or the policies on their taxes?

Longdog
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Re: death tax on savings accounts?

Post by Longdog » Sun Apr 01, 2018 6:35 am

If the total value of your estate is under $11.2 million, there is no federal estate tax due. Does that answer your question?
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Gill
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Re: death tax on savings accounts?

Post by Gill » Sun Apr 01, 2018 6:36 am

...also, they don’t report anything as income.
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Dantes
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Re: death tax on savings accounts?

Post by Dantes » Sun Apr 01, 2018 6:37 am

Dying is free. Its what comes afterwards that might cost money. Taxes are based on the total value of the estate. Federal inheritance tax currently starts when the estate is valued well into the millions. State taxes vary.

neoptolemus412
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Re: death tax on savings accounts?

Post by neoptolemus412 » Sun Apr 01, 2018 6:50 am

.2% (2 out of 1,000) estates qualified for estate tax purposes when the exemption was $5.43 million. The exemption was raised to almost double at $11.2 million for 2018. The first question, is your estate close to or over $11.2 million? The tax bill sunsets in tax year 2025, so if you believe your estate will fall between $5.43 & $11.2 million between now and then, it's probably good to talk to an estate attorney to structure your estate appropriately.

livesoft
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Re: death tax on savings accounts?

Post by livesoft » Sun Apr 01, 2018 6:52 am

The answer depends on the state one lives in and maybe even on the state the beneficiary lives in. Previous responses have neglected to mention that a state has its own tax system beyond the Federal tax system.
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Gill
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Re: death tax on savings accounts?

Post by Gill » Sun Apr 01, 2018 7:40 am

livesoft wrote:
Sun Apr 01, 2018 6:52 am
The answer depends on the state one lives in and maybe even on the state the beneficiary lives in. Previous responses have neglected to mention that a state has its own tax system beyond the Federal tax system.
Based on the facts given, I was assuming the estate was below the limits of any state.
Gill

mptfan
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Re: death tax on savings accounts?

Post by mptfan » Sun Apr 01, 2018 7:43 am

There is no such thing as a death tax, perhaps you were referring to the estate tax?

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Re: death tax on savings accounts?

Post by Geologist » Sun Apr 01, 2018 7:50 am

Furthermore, none of this depends on whether the savings account is in your living trust or not. It is all part of your estate.

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Re: death tax on savings accounts?

Post by Geologist » Sun Apr 01, 2018 7:51 am

Gill wrote:
Sun Apr 01, 2018 7:40 am
livesoft wrote:
Sun Apr 01, 2018 6:52 am
The answer depends on the state one lives in and maybe even on the state the beneficiary lives in. Previous responses have neglected to mention that a state has its own tax system beyond the Federal tax system.
Based on the facts given, I was assuming the estate was below the limits of any state.
Gill
In some states, there is no lower limit. For example, in Pennsylvania, there is an inheritance tax, whose rate depends on how related the inheritor is and there is no exemption. A spouse pays nothing, however, and the rate for children is quite low.

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F150HD
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Re: death tax on savings accounts?

Post by F150HD » Sun Apr 01, 2018 8:03 am

I have a bank account in a living trust...
Do they claim either the savings account or the policies on their taxes?
Thought I read interest earned can be taxable to the beneficiary when distributed from the estate.

example:

.....Interest was paid on the bank account. While you won’t pay tax on the $25,000 cash you get, you will pay tax on the interest that the cash earned while it was part of the estate. It will be “passed through” to you as the beneficiary.

That’s the part that’s really confusing to most people. You read the IRS books that say inherited money isn’t taxable—it isn’t. But the income that money earns while it’s sitting in the estate is.

The taxable income will be reported on a document called a K1....


http://robergtaxsolutions.com/2012/09/i ... e-taxable/

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David Jay
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Re: death tax on savings accounts?

Post by David Jay » Sun Apr 01, 2018 8:11 am

How much interest will there be with a TOD account? How long will it take the executor to notify the beneficiary?
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Re: death tax on savings accounts?

Post by LadyGeek » Sun Apr 01, 2018 8:16 am

mptfan wrote:
Sun Apr 01, 2018 7:43 am
There is no such thing as a death tax, perhaps you were referring to the estate tax?
It's easier to find information when the correct terminology is used. I retitled the thread.
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brandy
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Re: [Estate tax] on savings accounts?

Post by brandy » Sun Apr 01, 2018 10:18 am

Thanks for re-titling and correcting terminology. I never died before, so I didn't know. :happy
Thanks too for the information. The total value of my estate is below a million.
The bank account I'm asking about is NOT part of the trust.


These little insurance policies (~3K each) are part of previous employment package. So they are not taxable either, then?

Gill
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Re: [Estate tax] on savings accounts?

Post by Gill » Sun Apr 01, 2018 10:42 am

brandy wrote:
Sun Apr 01, 2018 10:18 am
Thanks for re-titling and correcting terminology. I never died before, so I didn't know. :happy
Thanks too for the information. The total value of my estate is below a million.
The bank account I'm asking about is NOT part of the trust.


These little insurance policies (~3K each) are part of previous employment package. So they are not taxable either, then?
Nothing will be taxable at the Federal level but, as indicated above, it's possible there could be state tax in certain states. What is the state of your domicile?
Gill

ETadvisor
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Re: [Estate tax] on savings accounts?

Post by ETadvisor » Sun Apr 01, 2018 10:49 am

brandy wrote:
Sun Apr 01, 2018 10:18 am
Thanks for re-titling and correcting terminology. I never died before, so I didn't know. :happy
Thanks too for the information. The total value of my estate is below a million.
The bank account I'm asking about is NOT part of the trust.


These little insurance policies (~3K each) are part of previous employment package. So they are not taxable either, then?
You should not have to worry about any federal estate tax issues unless the exemption returns to the law as of 2001 ($675,000).

brandy
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Re: [Estate tax] on savings accounts?

Post by brandy » Sun Apr 01, 2018 11:28 am

The beneficiary is in Indiana.

Sidney
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Re: [Estate tax] on savings accounts?

Post by Sidney » Sun Apr 01, 2018 11:41 am

brandy wrote:
Sun Apr 01, 2018 11:28 am
The beneficiary is in Indiana.
I'm not sure but I think the laws in your state prevail, not the state of the beneficiary.
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Steelersfan
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Re: [Estate tax] on savings accounts?

Post by Steelersfan » Sun Apr 01, 2018 12:01 pm

Sidney wrote:
Sun Apr 01, 2018 11:41 am
brandy wrote:
Sun Apr 01, 2018 11:28 am
The beneficiary is in Indiana.
I'm not sure but I think the laws in your state prevail, not the state of the beneficiary.
You're correct for my state (Pennsylvania). If you die here your heirs pay the inheritance tax no matter where they live.

livesoft
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Re: [Estate tax] on savings accounts?

Post by livesoft » Sun Apr 01, 2018 3:22 pm

Louisiana also have some unusual laws for folks who inherit assets. I don't know anything about Indiana.
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