Estates, testamentary trusts face higher tax bills

Exemption will continue to allow graduated tax rates for the first three years.

Matthew Elder 9 July, 2015 | 5:00PM

When someone dies, their assets are immediately deemed to be transferred to an estate. This is essentially a trust administered by the estate's executor or executors, and it is subject to taxation on any income earned. The bad news: Taxes are heading higher, starting in 2016.

Affected by the pending tax changes is any income earned after the date of death. This is deemed to be earned by the estate and is reported on the estate's tax return.

Under existing regulations, estates and testamentary trusts -- those created through the terms of a will -- pay income tax at the same graduated rates that apply to a living individual.

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Matthew Elder

Matthew Elder