You would get a step-up in basis, so you would not be responsible for gains that took place during the life of the decedent. … [Read more...] about Do you pay capital gains tax if you inherit appreciated assets?

There is rarely any good news to share about taxation, because the tax man is pretty active, but this is an exception. You do not have to claim an inheritance on your state and local income tax returns, and this applies to insurance policy proceeds and direct inheritances. When it comes to individual retirement accounts, it depends on the type of account. A traditional account beneficiary would have to report the income, but distributions from a Roth IRA are tax-free. … [Read more...] about What about income taxes?

There are a number of states in the union that have state-level estate taxes. Fortunately, we do not have an estate tax here in the Golden State. However, if you own property in a state with an estate tax, their tax could be a factor if the value of the property exceeds the exclusion in that state. The state-level exclusions are typically much lower than the federal exclusion. For example, there is an estate tax in Hawaii, and the exclusion is about half of the federal … [Read more...] about Is there a California state estate tax?

The estate tax was originally implemented in 1916, and there was no gift tax then. People took advantage of the loophole, but it was closed when the gift tax was enacted in 1924. It was repealed two years later, but it was reenacted in 1932. We have had a gift tax since then, and it is unified with the estate tax. The lifetime exclusion is a unified exclusion that encompasses lifetime gifts along with an estate. However, there is an additional annual gift tax exclusion that sits apart from … [Read more...] about Can you give gifts to get around the estate tax?

There is a marital deduction that gives you the ability to transfer unlimited assets to your spouse tax-free, but there is one stipulation. In order to use this marital deduction, your spouse must be a citizen of the United States. … [Read more...] about Do you have to pay this tax on transfers to your spouse?

No, in fact, very few families have to pay the estate tax. There is an estate tax exclusion that can be used to transfer a certain amount tax-free. The portion of an estate that exceeds this amount would potentially be subject to the estate tax and its 40 percent maximum rate. At the time of this writing, the exclusion is over $11.5 million, but it can be changed via legislative mandate. … [Read more...] about Is every estate subject to the federal estate tax?