Determining if Estate Taxes Apply to a Texas Property

People are often confused about whether an estate tax—also known as an inheritance tax—will apply to their property after their passing. While the federal regulations surrounding the estate tax often change, Houston estate planning attorneys are knowledgeable in calculating the value of the asset, along with the taxes the deceased’s family will have to pay. Having this knowledge ahead of time will prepare the family financially and emotionally for when the person passes. Below are common estate tax questions and the answers to these problems.

What is An Estate Tax?

An estate tax is a tax levied on the estate of a recently deceased person before the money passes onto their heirs. However, estate taxes are only applicable to estates that fall above a certain monetary threshold. Some states have estate taxes too; however, Texas is not one of those states. Therefore, Texans will only have to worry about the federal estate tax on their properties. The federal estate tax applies for estates worth more than $11.7 million. For married couples, the rate is doubled—meaning, a married couple’s estate must be more than $23.4 million to have to pay the estate tax.

How Do I Calculate if I Will Have to Pay an Estate Tax?

In order to determine if an estate is over the federal estate tax cap, an estate planning attorney will determine the fair market value of the property, or properties, of the deceased. If the individual owns more than one property, all assets will be totaled to determine the estate’s value. The cost is assessed at either the time of the deceased person’s death or when the assets are transferred to the inheritor.

The fair market value of a property is the amount that the asset would sell for on the open market. The fair market value will have a valuation date—meaning, the date assumed the property would be sold on the open market. To determine a fair valuation date, an appraiser will generally pick the date of the deceased’s passing. But if the value of the property has decreased significantly, appraisers are able to pick any date within six months of the owner’s death. This is because if the value of the property dropped by a large amount, the inheritors may not need to pay a tax on the estate. However, it is important to note that the timing of the valuation applies to all assets within the deceased’s estate. This means one date cannot be chosen to value the person’s house, while another is used for all other assets.

Because determining the fair market value of a person’s estate can be a difficult task, individuals going through the process should contact an experienced estate planning attorney.

Contact an Experienced Estate Planning Attorney

If you or a loved one are unsure if an estate tax will be applied to your property, contact the knowledgeable Houston estate planning attorneys at McCulloch & Miller, PLLC. We understand that planning for the future can be stressful. Our attorneys have decades of experience in a variety of estate planning matters and are here to meet your family’s needs. To schedule a free, no-risk consultation, give us a call today at 713-333-8900.

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