You may be one of the few people whose estate was supposed to pay gift taxes or federal real estate, which means that some of your “stuff” may end up going to Uncle Sam. How do you know if you’re in that situation?
In 2009, if your property is worth less than $ 3.5 million, or if you are married and planning to leave everything and everyone, but that amount for your spouse is exempt from federal real estate taxes if you die. The same is true if you leave those activities to a qualifying charity. Any amount on this, however, is subject to a 45% property tax. 2010 will see the culmination of the federal government lift the property tax. If you die in 2010, your property will not be subject to a federal property tax, no matter how much it is worth it. Whether the property tax will reappear in 2011 is still up for Congress to decide.
Husband and wife can transfer assets to each other during life and death. There are no limits or fees on this transfer. For example, if you marry or remarry a person who owns a house in his individual name, that house can be re-titled in co-ownership. Your spouse would be legally giving half the house value. No gift or property tax transfer would be due, because this transfer is made between a married couple.
If you transfer assets to anyone other than your spouse or if you don’t have a spouse, the transfers are subject not only to real estate taxation, but potentially state inheritance taxes as well. To avoid property taxes, you could pass all or enough of your assets on to a qualifying charity. If you find yourself in this situation, you have wonderful planning opportunities available to you. Consult a qualified estate planning attorney immediately if you do not have a housing development plan currently in effect.