Estate Tax

The nine-month window provided by the IRS is a predatory timeline that leaves little room for strategic market timing or the negotiation of favorable terms. If an estate lacks sufficient cash to cover a forty percent tax rate on its total value, the executor is legally compelled to sell property regardless of whether it is a cooling real estate market or a period of economic volatility. This creates a state of financial emergency where your family's most prized real estate is sold in a fire sale to satisfy a tax lien.

• The IRS does not grant extensions for payment based on the inability to sell property at fair market value.
• Forced liquidations often result in a twenty to thirty percent loss of equity compared to a standard sale.
• Heirs are frequently forced to take high-interest bridge loans to satisfy the tax debt while waiting for a property to sell.
• The pressure of the deadline empowers buyers to make low-ball offers, further diminishing the estate's value.

The federal government places a silent, automatic lien on all estate property the moment a heartbeat stops, effectively freezing the liquidity of an inherited asset. This lien is an invisible cloud on the title of every piece of real estate in the estate, preventing the heirs from selling, refinancing or even transferring the deed to their own names without a formal release from the IRS. A title company will not clear a sale and a bank will not issue a mortgage until the estate receives a formal discharge of the lien. We manage the "Partial Release of Lien" process with the IRS to allow for strategic sales while the final tax audit is still pending.

The government specifically looks for valuation discounts applied to family-owned entities, such as those for lack of marketability or lack of control, to justify an audit. If the IRS can prove that your family limited partnership or trust was a mere "sham" for tax avoidance rather than a legitimate business entity, they will pull the full value of the underlying assets back into your taxable estate. This results in a massive tax assessment on wealth you believed was already protected.

• Lack of marketability discounts are frequently challenged if the partnership assets are purely liquid stocks or cash.
• Fractional interest discounts in real estate are audited to ensure the "unity of interest" among family members does not negate the discount.
• The IRS utilizes "substance over form" arguments to ignore the existence of trusts created shortly before death.
• Failure to follow formal partnership meeting and accounting protocols provides the IRS with grounds to pierce the entity shield.

An inaccurate appraisal is not just a tax problem: it is a legal liability for your heirs. If the IRS determines that an asset was undervalued on the tax return by a significant margin, they can impose accuracy-related penalties that add an additional twenty to forty percent on top of the tax increase. This turns a simple disagreement over value into a catastrophic financial penalty that can exhaust the remaining liquid assets of the estate. We coordinate with forensic valuation experts to provide a defense-ready baseline that forces the IRS to accept your reported values and avoid these predatory penalties.

Under Section 2036 of the Internal Revenue Code, if you transfer property to a trust but continue to use that property or control its income without a formal arms-length agreement, the IRS treats the gift as incomplete. They will treat the property as if you still owned it at the moment of death, effectively nullifying years of planning. We engineer irrevocable structures that satisfy the strict requirements of the tax code while maintaining the long-term integrity of your family's wealth.

• Retaining the power to change beneficiaries is often seen as a retained interest that triggers taxation.
• Living in a gifted home without paying fair market rent allows the IRS to pull the property back into the estate.
• Using trust assets to pay personal bills provides the evidence needed to invalidate the trust shield.
• Serving as both the sole trustee and the sole beneficiary of an irrevocable trust can collapse the legal distinction of the entity.

When an estate is tied up in a lengthy probate dispute, the administrative costs and interest on unpaid taxes continue to mount. Every month of delay is a month where the government's claim against your assets grows larger through the accrual of interest. Furthermore, if the estate is involved in litigation among heirs, the IRS may utilize the discovery from those lawsuits to find additional taxable assets. SJKP LLP provides the decisive legal force needed to accelerate the probate process and settle tax disputes quickly, ensuring that the maximum amount of capital remains with your beneficiaries.

A decoupled tax system means the state ignores the federal exemption and applies its own much lower limit to your assets. If you inherit a house worth two million dollars in a state with a one million dollar exemption, you are immediately liable for taxes on the difference. This creates a sudden liquidity crisis for heirs who have inherited real estate but lack the cash to pay the state treasury.

• State tax liens are often more difficult to clear than federal liens because of local bureaucratic hurdles.
• Some states tax life insurance proceeds, which are typically exempt at the federal level.
• Domicile disputes can occur if the state claims the decedent was a resident even if they died elsewhere.
• Out-of-state property is subject to ancillary probate and state-level taxes in the jurisdiction where it is located.

State tax authorities will fight for the right to tax an estate by claiming the decedent was a resident of their state, even if they had moved to a tax-friendly jurisdiction. If a decedent owned a vacation home in one state and a primary residence in another, both states may attempt to collect a tax on the same assets. This results in a predatory double-taxation scenario that can tie up an estate in litigation for years. We build a litigation-resistant record of domicile that prevents rival states from laying claim to your family's wealth.