When it comes time to think about bequeathing property and assets to your heirs, you might be worried about one thing in particular: the inheritance tax. The sheer sound of such a tax sends people reeling in fear about leaving anything to their spouses and children. However, in about ninety-five percent of all cases, the inheritance tax cannot and will not be applied. If you are still concerned about the inheritance tax, here are a few things you should know.
Only Six States Have an Inheritance Tax
For something so threatening to your wealth and the wealth of your heirs, not that many people really have to be concerned with it. Only six states have an inheritance tax, which includes New Jersey, Maryland, Pennsylvania (all East Coast states), Nebraska, Iowa, and Kentucky. If you live in any other state at the time of your death, your heirs will never be charged an inheritance tax.
The Inheritance Tax Only Applies to Those Six States and None Is Gathered at the Federal Level
Oddly enough, the IRS does not collect an inheritance tax. It does not care if you inherited ten thousand or ten million. There may be other tax situations involving the IRS and your heirs' inheritance, but usually it only applies if your heirs sell part of their inheritance or cash out an asset that you bequeathed to them. Ergo, you if leave them nothing but cold, hard cash and the family home, the IRS is not interested in the total value or sum of the inheritance.
If You Move Out of a State That Charges an Inheritance Tax and into a State That Does Not...
If you move out of a state that charges an inheritance tax and into a state that does not charge the inheritance tax, your heirs still get their full inheritance as well. So, let's say that you were living in Maryland, a state that charges the inheritance tax. You move to Ohio, which does not have an inheritance tax, and you live there until you pass away or you move to yet another state with no inheritance tax and pass away. Maryland cannot retroactively claim any inheritance tax because you were once a resident there, and your heirs do not have to pay the tax at all because of where you resided when you passed.
If you have any further questions on this tax, ask your estate planning attorney. For more information, visit websites like https://www.linskylaw.com.