Are assets such stocks, bonds and mutual funds which were held in a TOD account, and a house that was part of a revocable living trust, subject to inheritance taxes?

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Are assets such stocks, bonds and mutual funds which were held in a TOD account, and a house that was part of a revocable living trust, subject to inheritance taxes?

I thought not but I was recently told otherwise.

Asked on May 2, 2014 under Estate Planning, New York

Answers:

Nathan Wagner / Law Office of Nathan Wagner

Answered 7 years ago | Contributor

Yes, those assets are subject to estate tax. By placing them in a revocable trust or a TOD account, you make them no longer subject to probate. So the assets can be transferred to the heirs without an order from the probate court. However, the assets can still be taxed. 

By the way, estate taxes are not an issue for most people. The federal government currently only charges estate taxes on estates with more than $5.34 million in assets. And most states do not have an estate tax. 


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