There is no way to state with certainty the average size of an estate. However, it is reasonable to say that most estates are not large enough to trigger the estate tax, which as of 2011 is $5 million. The average estate is characterized by certain assets.
An estate is made up of the whole of a person's possessions and liabilities at the time of death. It is calculated as a collection of items and subject to state and federal taxes. Distributions of estate assets are made in accordance with the decedent’s trust document or will. If such instruments are not in place, distributions are made in accordance with the intestacy laws of the state where decedent resided at the time of her death.
The average estate contains a healthy collect of assets, including real estate, heirloom or investment properties, business interests, stocks, bonds, mutual funds, money market accounts, brokerage accounts, jewelry, antiques, works of art and other valuable collections. Larger estates may contain multiple high-value properties but, on average, most estates contain only a primary residence and a small collection of personal assets.
Fair Market Value
The fair market value of an estate, including the value of trusts, insurance and annuities, determines the decedent's estate taxes. A certified appraiser must set value on all assets. Certain deductions may apply, including mortgages and other debts. The unified credit, which is $1 million, may also further reduce the decedent’s tax bill.
An estate can pass along up to $5 million in assets to descendants without triggering the estate tax. The average estate will not trigger the estate tax, but estates that exceed the tax-free threshold may pay up to 55 percent in taxes. Estate tax returns and tax bills must be paid by April 15 following the year of death or the estate faces a higher tax.
- Nolo: Estate Tax - Will Your Estate Have to Pay?
- IRS.gov: Estate Tax
- "Forbes" Magazine; Obama Announces Estate Tax Deal With Republicans: 35 Percent Tax Rate and $5 Million Exemption, for Two Years; Hani Sarji; December 6, 2010
- LegalZoom: Living Trusts
- IRS. “Instructions for Form 706,” Pages 10-11. Accessed Sept. 15, 2020.
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- IRS. “Instructions for Form 706,” Pages 2, 17-19. Accessed Sept. 15, 2020.
- IRS. “Instructions for Form 706,” Pages 2-3. Accessed Sept. 15, 2020.
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- Tax Foundation. “Does Your State Have an Estate or Inheritance Tax?” Accessed Sept. 15, 2020.
Charlie Gaston has written numerous instructional articles on topics ranging from business to communications and estate planning. Gaston holds a bachelor's degree in international business and a master's degree in communications. She is fluent in Spanish and has extensive travel experience.