Inheritance Tax

When an individual dies and leaves assets to beneficiaries, the amount that the beneficiaries are taxed on the assets received is known as an inheritance tax,  The end result for the beneficiary is that the inheritance after tax is a much lower amount than the inheritance before tax.

Taxable Inheritance

Any assets that are included in a will and transferred upon the death of the owner is potentially taxable.  For example, property tax will apply to any land or real property that the deceased leaves to a beneficiary.  The tax on the estate is imposed on the entire or “gross” estate and includes nearly all assets.  However, there are some expenses that qualify for an estate tax exemption, such as:

• Expenses related to funeral costs and estate administration costs
• Qualified donations to charity
• Primary residence if left to a surviving spouse

Gift Tax vs. Inheritance Tax

The main difference between gift tax and inheritance tax is that a gift tax is imposed when assets are transferred while the original owner is still alive, while inheritance tax is imposed upon the death of the original owner.

State Inheritance Tax

In addition to the federal inheritance tax, many states also impose their own state inheritance tax.   Depending on the state, some beneficiaries who are exempt from federal inheritance tax will still be liable for state tax on inheritance. 

Getting Inheritance Tax Legal Help

In order to understand your inheritance tax options, it is important to seek guidance from an Inheritance tax attorney who specializes in estate planning and taxation.  An attorney will be able to help you maximize your inheritance after tax.