The adjusted gross estate is the total value of a deceased person's property after deducting specific expenses. These expenses can include:
This calculation is essential for determining the federal estate tax and represents the amount the deceased intended to pass to a marital trust.
The term "adjusted gross estate" is primarily used in estate planning and tax law. It plays a crucial role in the following areas:
Individuals can manage their estate planning with the right tools, including legal templates offered by US Legal Forms, which are drafted by experienced attorneys.
Here are a couple of examples of abatement:
Example 1: A person passes away with an estate valued at $500,000. After deducting $50,000 in funeral and administration expenses, the adjusted gross estate is $450,000. This amount will be used to calculate any estate taxes owed.
Example 2: (hypothetical example) A decedent intended to leave their entire estate to a marital trust, which included assets worth $1 million. After deducting $100,000 in creditor claims, the adjusted gross estate would be $900,000.
| Term | Definition | Key Differences |
|---|---|---|
| Gross Estate | The total value of all assets before deductions. | Gross estate does not account for any deductions, while adjusted gross estate does. |
| Net Estate | The value of the estate after all debts and expenses are paid. | Net estate is the final amount distributed to heirs, while adjusted gross estate is used for tax calculations. |
If you are managing an estate, it is essential to calculate the adjusted gross estate accurately. Here are steps you can take:
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The adjusted gross estate is used for tax calculations after deductions, while the net estate is the amount left for distribution after all debts are settled.