Who Should Pay Your Estate Tax on Your Retirement Accounts

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
• Pages: 10-10

10

WHO SHOULD PAY

YOUR ESTATE TAX ON

YOUR RETIREMENT

ACCOUNTS

An interesting and serious problem may exist when there are significant

retirement assets in your estate that are subject to estate tax. The estate

tax may include both federal estate tax liabilities and state estate tax lia-

bilities in a number of states.

There are several reasons why estate taxes may be triggered on these

retirement assets. These reasons include:

1. The estate tax on the retirement assets may be triggered because

there is no surviving spouse, and therefore no marital deduction

is available on the taxpayer’s death to eliminate the estate tax

liability.

2. The estate tax may be triggered because there is a marriage that

is subject to a prenuptial agreement and hence there is no marital

deduction or a limited marital deduction.

3. The estate tax may be triggered because the federal estate tax ex-

emption is not sufficient to eliminate the federal estate tax liability.

4. The estate tax may be triggered because the state estate tax ex-

emption is not sufficient to eliminate the state estate tax liability.

The state estate tax exemption may be less than the federal estate

tax exemption.

5. The estate tax may be triggered because an IRS estate tax exam-

iner audits the estate and increases the estate tax liability.

6. The estate tax may be triggered (in certain states) because a state

estate tax examiner audits the estate and increases the state estate

tax liability. This audit may in turn increase the federal estate tax

liability as well.