Home Articles Frequently Asked Questions and Answers About Estate Tax

Frequently Asked Questions and Answers About Estate Tax

What is an estate tax?

It is good to understand what an estate is. In that case, an estate comprises of premises and everything that is found within the premise. For example, if you own a parcel of land which has buildings and other assets, then this will be considered as your estate during taxation. The taxes attached or charged on owning properties within an estate is what we refer to as the estate tax. An estate tax is just like any other tax payment where a person need to fill an estate tax return form in order to declare the fact that he/she is paying or has been paying an estate tax.

Is it mandatory to file an estate tax return?

In some countries like UK and the US, filling an estate tax return is mandatory as there are some of the rules and regulations stated through laws which requires one to file an estate tax return. However, those individuals who do not possess or own any estate tax are not expected to file such a return but in some case, they are allowed to file a nil return. Filling an estate tax is crucial in some countries as it helps the government to charge estate taxes according to the size of the estates. Some estates are inherited from the parents or guardians while others may be inherited from the deceased. Different taxes apply for different categories of estates taxes.

What is the estate examination proposal?

In normal circumstances, a government agency dealing with tax allocation will send values in order to value an estate and all the properties in it. In the event that you feel that they have over valued your estate, then you have all the rights to appeal against the examination proposals stated by the value checker. When disagreeing with such a proposal, you will need to attach copies of certificates from quantity surveyors which will help in correcting the sum stated in the proposal. In most case, the government agencies dealing with estate tax collections will give an estimated proposal after the examination but this does not mean that everything will be final.

What are the circumstances when a person can ask for estate tax exemption?

Estate tax exemptions are basically determined by various factors. In that case, a person who owns property and estates can be exempted from estate tax if he/she has been declared unable to pay taxes. For instance when a person becomes disabled or has been declared bankrupt. Whenever someone has been declared bankrupt, he/she files a bankruptcy report and this is when he/she will be exempted from paying estate taxes. On the other hand, in some countries, a person may be exempted from estate tax when the owner of the property is deceased and has left a will transferring the properties and all the estates to a minor. You must be aware of the fact that different countries have different tax exemption rules and regulations. It depend in the country of residence.

I have a spouse of same sex, will my estate tax purpose consider this for marital deductions?

Yes, this only applies in those countries where same sex marriages have been legalized through law. For example, some of the states in the US have legalized same sex marriages and when seeking for marital estate tax deductions, such kind of marriage is always considered. As long as you were legally married, you will be entitled estate tax deductions. On the other hand, if the states does not allow for same sex marriage, the term “husband and wife” may not hold and in such cases, you will not be considered for estate tax exemption purposes.

What will happen if I sell a property that I inherited from another party?

Selling a property inherited immediately after the transfer from a deceased will not attract any estate tax. This is simply because there is usually a little gain or no gain at all to the account. In most cases, any property inherited will be considered as a gift and this may not qualify for estate tax returns. In some countries like he US for example, there are different rules and regulations which applies to selling a property immediately after it has been acquired from the first or the second party.

What to do when I don’t fill the estate tax by the due date?

The estate representatives may request you to fill the estate tax returns at an extended period that is normally given as soon as the due date has expired. However if this delay continues even after the extension period, the agency will be forced to impose some penalties. Different countries have different penalties and in some worst cases, the state will be forced to auction ones estate with the aim of paying for the penalties.