Ask Me Help Desk - Estate Tax

I have been fortunate enough to be included in a great uncle's will. My portion is 5 properties with a fair market value of $1,160,000.00. There is a distant relative that feels she got the shaft and wants a part of the inheritance as I received a letter from her attorney basically saying please agree to share a portion of my part with her. I am not going to as there were reasons she wasn't included and they have no basis to contest the will. Her attorney told me the estate is approx. $4 million total. The Estate tax cap of $2 million is exceeded and the estate tax will be assessed on the remaining $2 million at a rate of about 50% leaving $1 million in estate taxes due. He had a bank balace of about $790,000.00. Am I correct in assuming the liquid money (which is willed to someone also) would be used to pay the estate taxes due? Or do the heirs have to pay their portion on a pro rata basis? I've been told the estate tax is paid by the estate. No tax information was included in the will as to where the taxes were to be paid from. If the taxes exceed his liquid money then how is it determined what properties to sell to cover the fees and taxes? The representative of his estate has non inverventional powers. This lady's attorney has informed me of this to try and convince me to share my inheritance in trade for them paying half the estate taxes of my portion which he says will be about $116,000.00. Am I wrong in thinking the estate taxes were paid by the estate? He has also told me I will not be given the deeds to my properties until I pay my full amount of the taxes if I decide to not share.

Washington state.

Quote:

Originally Posted by tswilcox

I have been fortunate enough to be included in a great uncle's will. My portion is 5 properties with a fair market value of $1,160,000.00. There is a distant relative that feels she got the shaft and wants a part of the inheritance as I received a letter from her attorney basically saying please agree to share a portion of my part with her. I am not going to as there were reasons she wasn't included and they have no basis to contest the will. Her attorney told me the estate is approx. $4 million total. The Estate tax cap of $2 million is exceeded and the estate tax will be assessed on the remaining $2 million at a rate of about 50% leaving $1 million in estate taxes due. He had a bank balace of about $790,000.00. Am I correct in assuming the liquid money (which is willed to someone also) would be used to pay the estate taxes due? Or do the heirs have to pay their portion on a pro rata basis? I've been told the estate tax is paid by the estate. No tax information was included in the will as to where the taxes were to be paid from. If the taxes exceed his liquid money then how is it determined what properties to sell to cover the fees and taxes? The representative of his estate has non inverventional powers. This lady's attorney has informed me of this to try and convince me to share my inheritance in trade for them paying half the estate taxes of my portion which he says will be about $116,000.00. Am I wrong in thinking the estate taxes were paid by the estate? He has also told me I will not be given the deeds to my properties until I pay my full amount of the taxes if I decide to not share.

Washington state.

I'm by far no tax expert but I sure as heck wouldn't come to the internet for advise on a $4 million estate.

You really should see an attorney.

Quote:

Originally Posted by AW805

I'm by far no tax expert but I sure as heck wouldn't come to the internet for advise on a $4 million estate.

You really should see an attorney.

I will be seeking an attorney on this now but am out of town right now and just got the paperwork and thought someone might have some ideas.

I tend to agree with AW; any advice you get on this forum would be marginal at best. That said, here is what I have to say:

First, the tax rate for the estate tax is NOT at 50%, not for just over $2 million dollars in taxable assets. The tax rate STARTS at 15% and works up to a maximum of 46%. Any federal estate and state death/inheritance taxes will be paid by the estate before you even see any of the money. That is one of the duties of the executor.

Second, tell the distant relative's attorney to pound sand. He is just trying to get you to give up part of your inheritance without a fight.

Three, go get your own attorney.