At your death, all of your assets must be valued by your executor. That includes bank accounts, securities, real estate, collectibles, etc. From this gross estate, certain deductions are permitted:
* Bequests to a spouse.
* Bequests to charity.
* Outstanding liabilities that must be repaid.
The net value–your taxable estate–is reported on an estate tax return, Form 706, which is due nine months after death. A six-month filing extension is available but any tax due must be paid within nine months of death.
In 2007, the first $2 million of your taxable estate is exempt from tax. Any excess is taxed at 45 percent; state tax also may be due. If you anticipate a taxable estate over $2 million, you should make an effort to see that liquid assets will be available, from which your executor can pay the estate tax.
