Does my father still need to file a federal return of estate taxes?
I am the executor of my in-laws will. My mother-in-law passed away in August 2007 and my father-in-law is selling their home. He is not making any money from the sale, in fact is getting less than what he paid for it. The Title company is requesting that an "Affidavit of No Florida Estate Tax Due" is completed which states "When Federal return is required".
Since her belongings all went to her spouse, is a Federal return of estate taxes applicable?
Expert Answer
Since your question involves taxes and titles, matters which often need direct eyeballing to coordinate and interpret, I must give you a bit of an honest but frustrating lawyerly hedge: It's hard to say without looking at the documents involved.
But perhaps a bit of general information and advice will help. First of all, know that as executor of your father-in-law's will, you have no real duty to act until his death"”when you will be responsible for managing the remaining property and distributing it as the will directs. But you are to be applaud for your helpfulness now.
A great deal of uncertainty surrounds federal estate tax these days"”especially given recent changes to the laws controlling it and the fact that Congress is likely to revisit the issue soon.
Currently, only large estates are subject to federal estate taxes; in 2009, the gross value must exceed $3.5 million before a return must be filed. Property left to a spouse who is a U.S. citizen passes free from estate taxes, but your father-in-law's estate may ultimately contain other taxable property.
And more uncertainty comes in because some estates must file tax returns even if they won't actually owe any tax, because deductions may put them under the taxable threshold.
It's likely the title company is hedging its bets in the hope of covering all possible contingencies. A wise step for you would be to pose the question directly to the state tax authorities at the Florida Department of Revenue at https://askdor.state.fl.us/FAQ/InqEntry.aspx.
An added beauty is that the response you get will be by email"”which you can then print and save as evidence that the action you took was directly from the horse's mouth"”or at least the horse's cursor.