Quote:
Originally posted by Mmmm, Burger (C.J.)
The fact that a middle-class person has most of his/her assets in a house doesn't mean that it won't be liquidated anyway upon death. If it's being liquidated, whether to pay taxes or not, it becomes irrelevant that they might have to pay estate tax.
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If I type "Fire sale" slowly, will you get it?
A sale driven by the need to pay taxes causes fire sale.
The estate tax is based on FMV -- meaning, what a willing buyer would pay a willing seller, with neither being under any compulsion to buy or sell.
So, if the value of a home for purposes of calculating the amount in the estate is determined according to FMV, but then the home is sold very quickly because the heirs need the cash to pay taxes, an even more substantial portion of the value of the home goes to pay taxes than what the tax code would appear to dictate.
If you think that the reason driving the sale is irrelevant, then talk to a lawyer who has had to handle the sale of a business in order to pay estate taxes. I had a big case that dealt with this very issue and speaking with these people was quite interesting, and educational (of course, I had to set aside my gut feelings about what 99% of the population does and actually listen, so it might not work for you).
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