19 Jul How are estate taxes paid after someone dies?

Q. My only daughter will be the owner of my estate when we pass away. She will have to withdraw the IRA fund within 10 years after we are gone. How will she pay estate taxes and when? The estate tax deduction is $11 million. Is that for both me and my spouse together or is it separate? We don’t have that much money either way.
— Planning

A. You are correct that your daughter, when she inherits your IRA, will have to take the funds out over 10 years.

Unless, of course, that law changes. But that’s how it is for now.

On the estate tax exemption you mentioned, the number is actually higher.

There is a $13.61 million federal lifetime exemption per person in 2024, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

That’s the amount exempt from federal estate and gift taxes, she said.

It’s important to note that New Jersey no longer imposes a separate estate tax and does not impose a gift tax, but there is an inheritance tax.

In your case, though, it does not apply because children of the deceased person are exempt, she said.

“The personal representative of the estate will be responsible for the filing and payment of any income taxes that may be due,” Whitenack said. “The reader may want to make sure that there are sufficient assets to pay any income tax that may be due and owing after the reader dies.”

Email your questions to .

This story was originally published in July 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.