inheritance tax


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Related to inheritance tax: capital gains tax, gift tax, estate tax

Inheritance Tax

A tax on the money or assets that one inherits from an estate, as opposed to a tax on the estate itself. In the United States, inheritance taxes are levied at the state level and apply to the inheritors rather than the estate of the deceased. Generally speaking, inheritance taxes vary according to the inheritor's relationship with the deceased. For example, a spouse rarely, if ever, is responsible for an inheritance tax. It should not be confused with an estate tax, which is a tax on the estate before it is distributed.

inheritance tax

A state tax levied on the recipient of an estate rather than on the estate itself. The tax varies by state and its severity in a given state usually depends on the kinship between the deceased and the heir. Some states levy a tax on the estate instead of a tax on the amount inherited. Also called death tax. Compare estate tax.
How can I minimize inheritance tax?

Estate and gift tax law is in a state of flux. An estate planning attorney will have the most up-to-date information available to assist you in minimizing your tax liability. Avoiding probate should also be a goal. Joint ownership, revocable living trust, irrevocable trusts, and life insurance may be useful tools to avoid or eliminate the estate tax and costs of probate, but only an experienced estate planning attorney can help you decide which of these tools will suit your needs best.

Gloria Cole, Attorney, private practice, Weston, MA

inheritance tax

a form of WEALTH TAX imposed by the UK government on a proportion of a person's private assets when these assets are transferred to the person's beneficiaries. Currently (as at 2005/06) ‘chargeable assets’ such as houses, stocks and shares, etc. up to a maximum of £275,000 are tax-exempt. Above £275,000 inheritance tax is levied at a flat rate of 40%. Assets transferred more than seven years before the donor's death are exempt from inheritance tax, while assets transferred between three and seven years before death are taxed at lower rates.

Inheritance tax superseded earlier UK arrangements for taxing wealth, including estate duty or death duty and capital transfer tax.

inheritance tax

see WEALTH TAX.

inheritance tax

See estate tax.

References in periodicals archive ?
This, in addition to the PS325,000 already in operation, will amount to a PS500,000 inheritance tax threshold per person.
There area number of ways you can mitigate your inheritance tax liability, including:A whole of life insurance policy - which generates a payment on death to cover any tax that may be due; putting money into tax-efficient |trusts for future generations, and gifting to charities - if you gift at |least 10% of your estate to charity the inheritance tax on the rest of your estate is reduced to 36%.
Paul reports that most UK companies listed on the Alternative Investment Market (AIM) qualify for BPR, and an investment in these companies would be exempt from inheritance tax after two years as long as the shares were still qualifying shares for the purpose of BPR and continued to be held at the date of death.
Some measure of Inheritance Tax relief might be available where the donor survives at least three years from the date of gift.
The original inheritance tax thresholds and gift allowances were set so that inheritance tax was originally a tax on the wealthy.
A senior Labour source said: "The Tories are aggressively exploiting this way of avoiding inheritance tax to boost their coffers.
If one was still concerned about an increase in investment risk then, theoretically, one could adopt a more conservative approach with their other investments which could enable one to achieve significant inheritance tax savings without necessarily increasing the risk of one's investment portfolio overall.
Even so, from 2010 the inheritance tax allowance will rise to pounds 350,000 per person, or pounds 700,000 for married couples.
Confusion over the policy will heighten speculation over a split between Mr Clarke and shadow chancellor George Osborne, who announced the plan to abolish inheritance tax on estates of less than Au1 million at the Conservative Party conference in 2007.
In his view, it is impossible to put a price on good financial advice, especially when facing the potential pitfalls of Inheritance Tax.
New Halifax research, based on data from the Inland Revenue, shows that inheritance tax revenue hit a record GBP1.