Ask the Expert: Estate size may shrink
Before you decide the dollar amounts of specific bequests, consider the possibility that your estate may be smaller when you die than when you write your will. Credit: iStock
Your mother's estate may include other assets you don't know about, like a brokerage account or a life insurance policy. But there's no magic fund that will enable you to inherit more from her than the total value of what she owns at the time of her death, no matter what her will says.
Indeed, depending on her financial situation when she dies, you could inherit substantially less than the amount in her accounts. The reason: Her executor will use the money in her estate to pay her outstanding bills, funeral expenses, legal fees and taxes before distributing whatever is left to her heirs. From what you say, your mother's estate isn't big enough to incur an estate tax. New York estate tax is only levied on estates worth more than $1 million, and federal estate tax applies only to those worth more than $5.25 million. But income taxes are another story. Her executor will have to file her income tax return for the year of her death.
Making specific bequests can have unintended consequences when an estate proves much smaller than anticipated. "For example, let's say your will says that you leave $60,000 to your favorite niece and the rest of your assets to your children. If your estate is only worth $60,000 when you die, your children will get nothing," says Jeffrey A. Zankel, a Melville estate lawyer.
Websites with more information bit.ly/18UqgmN and 1.usa.gov/18Uqn1C
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