subject: What You Need To Know About Inheritance Tax [print this page] Ensuring that your beneficiaries get the utmost care when you pass on should be one of the considerations you include when planning for your retirement. This includes the issue of inheritance taxes, and why your beneficiaries don't need to worry about it when you pass on. If you or your beneficiaries don't know what you need to know about inheritance taxes, they might get into financial trouble and find debt relief.
Let's start with the basics. There are two types of taxes property will be subject to when an individual dies - these are inheritance taxes and estate taxes. The first tax is what your beneficiaries may need to pay when they receive assets as stated in your will, while the second kind is imposed on your estate regardless of what any beneficiaries receive. The federal government mostly levies estate tax, although some states also impose this. These estate taxes need to be paid prior to the distribution of assets to any heirs or beneficiaries.
The amount beneficiaries pay for inheritance taxes varies, and depends on the states that levy these taxes. Because only relatively few states in the country impose it, most people don't have to worry about paying to receive what they've inherited. You'll need to pay these taxes if you live in Washington, Indiana, Pennsylvania, Iowa, Ohio, Maryland, Nebraska, Kentucky, or New Jersey - all other states don't require the payment of inheritance taxes.
As for the tax liability aspect of inheritance tax that stems from the death of the individual owning the assets, there's one way to discharge the resulting debt - somebody has to pay. If you understand the ins-and-outs of inheritance taxes, there's a good chance that your beneficiaries won't end up paying for it. Unless you live in a state that requires inheritance tax, it's not something that you even have to think about, although you should still be aware of laws regarding estate taxes. Talk to your tax advisor or financial planner for more in-depth information.
