Despite the pandemic, many Gen Z’ers are graduating from college and setting their course for success. This is a generation of young people who know what they want out of life and have the financial literacy tools – from podcasts to online platforms – to save for retirement, maximize their savings and achieve their goals.
Once their 401K plan and IRAs are set up, many Gen Z’ers turn their focus to their parents’ financial planning. They want to make sure mom and dad have also maximized their tax savings so they can get the most out of their inheritance. Here is what this savvy generation needs to know about the estate tax.
The estate tax, also known as the death tax, is a completely different tax than income tax. Income tax is a yearly tax on your income earned during that year. The death tax is a one-time tax on a person’s assets after they die. It is due nine months after a person dies if certain monetary thresholds are met. There are two levels of estate taxation, the state level and the federal level. Let’s look at an example of how it works.