Estate Tax

[common197]

My parents passed away and there was no beneficiaries on their Retirement funds. When the account is liquidated the moneys will be made payable to the estate. Is there any way to avoid the 40% estate tax on those funds? 

[KarenL4]

Hi, 

So sorry for your loss. 

In 2022, the federal estate tax ranges from rates of 18% to 40% and generally only applies to assets over $12.06 million; however, there just isn't enough information here for us to really help.  Feel free to add more details and repost here. 

That said, federal and state-imposed estate taxes can have very specific rules.  If you have a significant estate, you may wish to consider seeking the advice of a local qualified tax professional and/or estate attorney well versed in your state's and the federal rules.

Regards,

Karen

[Anonymous_ · Accepted solution]

There is no federal estate tax for estates valued at less than $12.06 million for 2022.

Assuming you are referring to estate income tax (e.g., reported on Form 1041), then the estate can avoid paying tax at the compressed rates by simply distributing the retirement funds to the beneficiary(ies) (via K-1(s)) to be reported on individual Forms 1040.

[SuziM]

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