Inheritance tax?

My Mother,who lived with me for the passed 15 months pass away 3 weeks ago. She left a will of which I am executrix. She had less than $48,000 in her (joint with me)checking and savings accounts (from the sale of her home last year.) I also had power of Attroney for financial matters. She had a $25,000 life insurance policy in which my brother and I are named benificiaries, but I filed the claim and the TCA is only in my name. She left a car worth about $4500 to which I have applied for title transfer to my name which is to be sold. I have already filled her state and federal income tax. My question is, because my name is on everything, dispite all moneies are to be equally divided between my brother and I, will I be responsible for inheritance taxes on this inheritance. The will is not being probated. Must I file the estate tax form? I live in New York State. Is there an exemption level, state and federal, in NYS?

A New York State Estate Tax Return is to be filed for estates greater than $300,000 for decedents who die between October 1, 1998 and January 31, 2000. For estates less than $300,000, no estate tax is due to New York State. As of February 1, 2000, New York has eliminated its estate tax and will here on forward share in the Federal Government's estate tax take.

The Federal Government exemption for the lifetime gift and estate tax credit was $625,000 in 1998, $650,000 in 1999, and is $675,000 in 2000 and 2001. If an estate is over this amount, a Federal Estate Tax return must be filed.

Joint accounts pass to you by operation of law regardless of what your mom's will says. Anything which passes to you and which you gift to your brother will be subject to a Federal gift tax. You can gift $10,000 or less per year to anyone without a tax 9called the annual $10,000 exclusion). Over $10,000 and you are required to file a gift tax return. The unified gift and estate tax credit allows you to gift up to $675,000 during your lifetime without having to pay a tax. However, the gift eats away at your lifetime credit. So if you gift away $50,000 to your brother, you file a gift tax return and $40,000 is deducted from your lifetime credit (since the first $10,000 is gift tax free under the annual exclusion).

By the way, the lifetime unified gift and estate tax credit will reach $1,000,000 in 2006 under the 1997 Taxpayer Relief Act.

Hope this answers your questions. Good luck.

I have a serious question on the same topic. I have just finished reading 3 different "popular" estate planning books. They all say that any gifts given yearly, even if 10,000 or less, all reduce the 675,000 estate tax credit by the total of the gifts. You state that only the amount over 10,000 reduce the credit. Are the books incorrect??? Please respond, as I have to make a quick decision on gifting.

Yes - those books are wrong. You may give $10,000 per year to anyone you would like and you do not need to report the gift and it does not reduce your federal unified gift and estate tax credit of $675,000. There is no limit to the amount of persons you can give the $10,000 per year to.