How does this work? If your estate will owe federal estate taxes are the people who are the beneficiaries to your accounts responsible for paying the taxes out of the amounts they inherit?
I understand if the estate owns property that property may have to be sold to pay the taxes due. But what if all assets were typical retirement, savings and investment accounts with named beneficiaries? How do they prevent the beneficiaries from taking the money and spending it before the amount due is known?
Or are the beneficiaries prevented from accessing the accounts they inherit until after the estate has been settled to determine the amount that needs to be withheld to pay the taxes due?
From what I can determine if you are the beneficiary of a deceased account you need only prove the death to the financial institution and the account becomes yours. Would the estate then have to demand payment from the beneficiary to cover the taxes that are eventually determined to be owed by the estate?
I understand if the estate owns property that property may have to be sold to pay the taxes due. But what if all assets were typical retirement, savings and investment accounts with named beneficiaries? How do they prevent the beneficiaries from taking the money and spending it before the amount due is known?
Or are the beneficiaries prevented from accessing the accounts they inherit until after the estate has been settled to determine the amount that needs to be withheld to pay the taxes due?
From what I can determine if you are the beneficiary of a deceased account you need only prove the death to the financial institution and the account becomes yours. Would the estate then have to demand payment from the beneficiary to cover the taxes that are eventually determined to be owed by the estate?