What is Gross Estate
Gross estate is the total dollar value of an individual’s property and assets at the time of their death. The gross estate figure does not reflect liabilities such as debt owed and taxes. When those charges are deducted, the sum figure represents the net value of individual’s estate.
BREAKING DOWN Gross Estate
Gross estate is typically calculated by the executor of the estate. An executor is a person appointed to administer the estate of a deceased person. The executor's primary responsibility is to fulfill the directives and wishes of the deceased. An executor of the deceased’s estate can only be appointed if they are specifically named on a legally recognized last will and testament. Otherwise, the duties of an executor will be handled by a court-appointed administrator.
The estate executor assesses and calculates the amount of assets that the deceased owned. The types of assets considered in the estate calculation include stocks, bonds, other investments, real estate and other personal property such as cars, buildings and collectibles. The gross estate figure is typically established for federal income tax purposes.
After the executor ascertains the gross value of the estate, any liabilities are deducted to compute the net estate value. Liabilities include any outstanding debt, funeral expenses, taxes and administrative costs, among others. The net estate will then be divided among any beneficiaries who are named in the will.
Benefits of Estate Planning
Estate planning can help individuals, couples, families and beneficiaries avoid complex and unforeseen tax situations during the emotional period following the death of a loved one. In addition to naming beneficiaries and deciding who will inherit the deceased’s assets, estate planning can also greatly simplify any financial matters that beneficiaries might have to deal with. Advanced estate planning tools, such as trusts, charitable giving, private foundations and others can also help protect an estate’s assets and limit or even eliminate federal estate taxes.
Where Can Estate Executors Find Assistance?
Individuals who are named as estate executors are not always experts on tax and financial matters. But there are a number of resources that can help with estate settlement questions and advice. For example, Internal Revenue Service (IRS) Publication 559 contains further details on how to determine and calculate the taxes owed on an estate. The document covers numerous other related issues as well, including which portions of an estate a beneficiary can deduct and how to claim deductions and credits. There are also multiple online resources, many available at no cost, that provide step-step instructions on how to settle an estate and that spell out other primary responsibilities of an estate executor.