estate tax

What is the name of your state? louisiana
regarding estate taxes, i was told that if it were not for the life insurance my children received when there father died that the estate would not have to pay federal estate tax, because the life insurance the gross estate was increased . what is the usual practice? just because my 2 children received life insurance i am being asked to pay the whole estate tax? shouldn't it be divided up according to what each got. there were other heirs involved that we learned about after the death, so it is not just one family involved. i want to be fair. but, i really don;t think this is fair to my children.

Who is telling you you need to pay the estate tax--is it an attorney or someone else? It appears that what you are being told is NOT true--life insurance, if it is payable to particular beneficiaries and not the estate, passes OUTSIDE of probate and should not be included in the estate assets (any good attorney knows this).

The estate tax is supposed to be paid for by the other assets in the estate, if there are any. How much estate tax are you being asked to pay? Only way you should consider paying it is if there is not enough money left in the estate to pay it.

You need to be consulting with a local CPA or tax accountant (who is experienced with estate matters) to get a second opinion about this that is professional. They can tell you whether federal and/or state estate taxes are due by you.

It seems like you are being deliberately misinformed to take advantage of your unfamiliarity with estate matters. Ask to see a copy of the estate tax return that shows how they came up with their calculations and I'll bet you anything they will back off and stop asking you to pay this. Knowledge is power!

DANDY DON IN OKLAHOMA ([email protected])

an attorney told me to pay it, so that the other heirs wouldn't question it or that they may demand the insurance money. the insurance money was left to my 2 children. the attorney told me that if it were not for the insurance policy that the estate would not be liabel for estate tax. the gross estate is 1.6 mil and the life insurance was 250,000. and he is asking my chidren to pay 22,000 in estate tax and the other 3 heirs 0. he also asked me to accept half of the administrators fee not to raise questions. heck what is legal and what the law allows is what i want. do you think it is fair and does it make sense that my 2 children should pay all of the estate tax just because they are the only 2 that got 250,000(125,000) a piece. because i don't know but they are paying tax on the whole estate, not just hte life insurance. what do i tell him? oh i almost forget the reason the life insurance is being taxed is because the policy was owned by the father of the kids and it becomes part of the estate, but they were beneficiary. thanks

Do not pay this estate tax unless you can afford to and you want to.
Is the attorney who is telling you this is he the executor of the estate? One reason he may be wrongfully including the insurance as part of the estate is so that he could claim a larger executor fee!

You need to get a second opinion about this from another probate attorney, or tell the current attorney that you feel it is improper for the life insurance money to be included in the estate. Just because the father owned the policy doesn't mean it is supposed to go into the estate. Ask him to show you the specific state law that says life insurance money is considered part of the estate. Since the kids were named as beneficiary, that money passes outside of probate.

Attorney also seems to have lied to you or spoken incorrectly. Even if there was no insurance money in this estate, there would still be $1 million in it and that might subject it to estate tax or maybe there is an exemption, but the estate is supposed to pay the estate tax, not the individual heirs. His statement about "so that the other heirs won't question it or that they might demand the insurance money" is also outright false: so what if the heirs did question it--he is supposed to explain that by law they aren't entitled to it, and anyway, they haven't questioned it so that is a moot point, and they have no legal basis to demand insurance money that was paid to someone else.

Are you a co-administrator of this estate? If you are not, then it might appear highly improper of you to accept his offer of half the administrator's fee not to raise questions.

Politely explain to this attorney that it is not fair for him to ask for your heirs to pay this tax when the other heirs are not being asked to do it, and anyway you should tell him that this estate can afford to pay the estate tax anyway. Do not let him talk you into something that is not legal, and if he keeps pestering you about this, tell him you are going to retain the services of another probate attorney or an auditor to review how this entire estate has been handled, and I'll bet he'll back off.

thanks for the info. i am the administrator of the estate and he wants me to share my compensation with one of the other heirs. thanks so much. i may need to get an auditer. would the estate pay the fees for an auditer. thanks

At this point you do not need to get an auditor. Only get one if he insists on you paying the estate tax.