A frequent question a Las Vegas estate planning lawyer receives often concerns the difference between an Estate tax and an Inheritance tax. In a short answer, the difference lays in who must pay the tax. The inheritance tax is a state or federal tax on the cash or property distributed from a decedent’s estate. The person that receives the cash or property must pay the tax. The estate tax is a federal or state tax on the value of an estate. The tax must be paid by or on behalf of the estate.
The Inheritance Tax
A handful of states still maintain the inheritance tax. Currently, they are Kentucky, New Jersey, Nebraska, Maryland, Pennsylvania, and Iowa. The federal government does not impose an inheritance tax.
Inheritance is a leading source of wealth in the US. If you have questions or concerns about leaving or receiving an inheritance, then you should consult with a knowledgeable Las Vegas estate planning lawyer.
The Estate Tax
The federal laws impose a tax on estates. The federal estate tax is a levy on the gross value of estates at the time of a decedent’s death. The tax affects relatively few estates, but the amount of revenue it brings is significant. The tax rate is 40 percent, but the tax threshold is quite high. The 2017 tax exemption on estates is $5.49 Million per individual or $10,980,000 for a couple.
Nevada Law of Estate and Inheritance Taxes
Nevada does not collect estate or inheritance taxes on Nevada decedent’s estates. A Nevada resident does have to pay inheritance taxes on inheritances that occur in the six states that require them. They must pay federal taxes on estates that exceed the federal estate tax threshold.
When tax questions arise concerning an estate or an inheritance, you should get qualified legal advice. The law offices of Sean Tanko offer expert assistance to Nevada residents on matters of estate and inheritance taxation.
