{"id":240633,"date":"2025-10-26T04:42:17","date_gmt":"2025-10-26T04:42:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/240633\/"},"modified":"2025-10-26T04:42:17","modified_gmt":"2025-10-26T04:42:17","slug":"how-can-i-prevent-my-heirs-from-being-hit-with-a-big-tax-bill-when-i-die","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/240633\/","title":{"rendered":"How can I prevent my heirs from being hit with a big tax bill when I die?"},"content":{"rendered":"

We\u2019re gathering your questions about all things money and finances. Each week, we get your questions answered by the people who know best.<\/p>\n

We got this question from Richard:<\/p>\n

I have a living trust. I also have several financial accounts with my trust as the beneficiary. My two daughters are the trust beneficiaries, 50-50. I was told they will have to pay taxes when the trust is addressed after I pass. So my question is do they have any options to avoid being hit with a large tax bill?<\/p>\n

David Berek, a tax attorney at Venable who specializes in estate planning and wealth transfer, said in general, children don\u2019t pay a tax on their inheritance.<\/p>\n

But there can be exceptions depending on the type of property being transferred to your children, he said.<\/p>\n

\u201cIf the property has not been taxed during your lifetime, someone is gonna have to pay the income tax,\u201d Berek said.<\/p>\n

For example, if leave your traditional IRA to your children or heirs after you die, they will pay an income tax when withdrawing funds from the account. \u201cSo either you pay the income tax when you pull the money out … during your lifetime, or someone receives your IRA, then they pay the tax,\u201d he said.<\/p>\n

<\/p>\n

\"Portrait<\/p>\n

David Berek, a Chicago-based tax attorney at Venable, who advises wealthy families, closely held and family-owned businesses, corporate executives and privately-owned family offices on advanced wealth planning and sophisticated transfer-tax strategies<\/p>\n

Berek said there are two types of taxes worth pointing out \u2014 estate tax and income tax.<\/p>\n

\u201cThere\u2019s a general rule in the tax law that gross income does not include the value of property acquired by reason of someone\u2019s death,\u201d he said. \u201cSo recognize that the money that you transfer to your heirs, your daughters, once they receive it and they earn an income \u2014 like they invest it and earn dividends and interest \u2014 of course, they\u2019re going to pay income tax on that return. But the actual transfer upon your death is not going to cause a tax.\u201d <\/p>\n

The tax on transferring property at death is the estate tax, but there are exemptions.<\/p>\n

Berek said the threshold is $15 million; so a person can pass along up to $15 million to their children and not face an estate tax.<\/p>\n

President Donald Trump\u2019s One Big Beautiful Bill Act<\/a>, passed in July, increased the exemption to $15 million per person, or $30 million for married couples, starting Jan. 1, 2026. And the amount will be indexed for inflation in the following years.<\/p>\n

For someone who dies in 2025, the threshold is $13.99 million, or $27.98 million for a married couple, according to the IRS<\/a>. The federal estate tax rate, paid by the deceased person\u2019s assets, ranges from 18% to 40%, and it\u2019s assessed on the current value of the assets, not what it was worth at the time of purchase.<\/p>\n

Have a financial question you want answered by an expert? Leave us a voicemail at 312-321-2122<\/a> or email us at moneyquestions@suntimes.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"We\u2019re gathering your questions about all things money and finances. Each week, we get your questions answered by…\n","protected":false},"author":2,"featured_media":240634,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132],"class_list":{"0":"post-240633","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/240633","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=240633"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/240633\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/240634"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=240633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=240633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=240633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}