Property Included in the Calculation of the Federal Estate Tax
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UPDATED: Jul 15, 2021
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Every asset you have at death, and in any location, is counted. The IRS starts by tallying up your gross estate, which includes the value of your probate estate – the property owned by you at the time of your death – and the property passing outside probate on your death. The types of property included are: personal property, your home, business interests, life insurance death benefits, deferred compensation, stock options, IRAs, retirement plans, pensions, 401(k)s and profit sharing, investments, real estate, bank accounts, jewelry, works of art, jointly-owned assets, promissory notes, 50% of your community property, mortgages, and cash. Your gross estate also includes any taxable gifts given away before your death. (However, gifts under $15,000 per year per recipient are not counted in the calculation of estate taxes.)
Then, the IRS subtracts your liabilities, such as loans, funeral expenses, debts owed at the time of death, legal and other estate administration costs and any charitable contributions made. Subtracted are those assets passing outright to a surviving spouse because of the rule which permits an unlimited amount to pass to a spouse with no estate tax burden.
The balance, if any, will roughly estimate your taxable estate.