inheritance tax

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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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Inheritance tax superseded earlier UK arrangements for taxing wealth, including estate duty or death duty and capital transfer tax.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

inheritance tax

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

inheritance tax

See estate tax.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Domicile can be used in state income tax planning, state inheritance tax planning and state estate tax planning.
It is difficult to quickly estimate the impact of state estate tax assessed on non-Florida property.
2013 for the entire amount of the federal and state estate taxes paid on the husband's return.
Children of farmers and timberland owners should be able to inherit properties from their families without having to log or sell off portions to pay the state estate tax. An inheritance should not be an unwelcome burden.
A credit shelter trust in a decoupled state with a state estate tax exemption lower than the federal exemption could result in a state estate tax at the first death.
State estate tax exemptions must also be factored into estate planning.
The new tax law also preserves the federal tax deduction for state estate taxes. This provision should remind you that estates may owe state estate tax even if they are exempt from federal estate tax.
Therefore, to the extent that a predeceased spouse did not use at least the portion of his or her basic exclusion amount equal to the state estate tax exemption of his or her state of residence (for example, through a credit shelter trust or some other bequest or devise other than to the surviving spouse), part or all of the deceased spouse's state estate tax exemption will be wasted.
However, they must be mindful of lurking pitfalls if they own property in another state or if they spend significant amounts of time in another state, as they may then subject themselves to state income tax in that state during their lives and/or state estate tax upon their deaths.
This is a mistake, she continued, and it "has caused many surviving spouses to unnecessarily incur state estate tax liability at the death of the first spouse." Most states with estate tax legislation require computation of the state estate tax in accordance with the Federal estate tax in effect through 12/31/2001, she explained.

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