Gross Estate vs. Taxable Estate

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Your Gross Estate is the sum total of the fair market value of everything you own or have certain interests in at the time of your death. These includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets.

The Gross Estate is the starting point for determining whether you need to file a federal estate tax return and for calculating your Taxable Estate. Once you have accounted for the Gross Estate, you can calculate the Taxable Estate by subtracting the relevant permissible deductions, which may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities.

Gross Estate to Taxable Estate Illustrative Waterfall
Illustrative Gross Estate and Taxable Estate Calculations

Prior to your passing, you may consider a number of different strategies for minimizing your estate tax burden.

If your Gross Estate exceeds the federal estate tax exemption threshold, your Executor or administrator is required to file a Form 706 Estate Tax Return within 9 months of your passing, even if your Taxable Estate is below the threshold.