Is it legal to hide the inheritance money so that you don't have to pay estate taxes?

Question

This is for homework and I need information on estate taxes. And I need sources if you can give me that too..

The deceased person would be the one to hide the money and is it cheaper to get a gift tax-when the person knows they're going to die and gives the money in advance

Answer 1

No, it is not legal. It is against the law to not pay taxes on inheritance money. That is why it is better ,if you know that you are dying , and don't want your family stuck with the taxes to give it to them ahead of time.

Answer 2

The person receiving the inheritance generally does not pay tax on the money received. The estate tax if any would be payed by the estate of the deceased person. Your question is a little confusing as to who would be hiding money. The following link will give you some help with estate tax issues. You can further explore the IRS site from this link.
http://www.irs.gov/businesses/small/article/0,,id=98968,00.html

Answer 3

Your question answers itself. If you have to hide something from the government then you are breaking the law.

My source list gives you an excellent reference as to how estate taxes work. The source discusses tax avoidance in the quote below.

"An alternative form of death tax is an inheritance tax (a tax levied on individuals receiving property from the estate). Taxes imposed upon death provide incentive to transfer assets before death.

Gift tax laws are generally designed to prevent complete tax avoidance by this route. The Federal Estate Tax is integrated with the Federal Gift tax so that large estates cannot be shielded from taxation by lifetime giving. Many states also impose an estate tax."

One way or the other taxes have to be paid. Gift taxes are lower than estate taxes, but both are taxes and both are required. The only way to get away without paying taxes is to receive less than $600. Generally there are no taxes on small amounts.

Take care,
Troy

Answer 4

actually, it would be pointless and would catch you in the longer run. The monies are reported to the IRS by the disbursing institution. It is impossible to escape any type of income in these times because of required reporting procedures and high tech. Call any local law firm that deals with inheritance issues and explain that it is a homework project and they will most likely assist you. You may also try the islocal H & R Block tax service. Hope this helps. NOTE; you could place it into a tax sheltered plan (see bank). One way or the other, the IRS is going to find out, and you will pay....

Answer 5

Mathew's first 2 sentences are copied directly from the IRS source he listed.

Your question is somewhat confusing. Estate taxes are paid before you inherit anything. It should be obvious that hiding anything to avoid taxes is not legal anywhere.

Answer 6

no 1 needs a source to know breaking the law is not legal. Of course you can't hide the $$ without risk. The estate must pay; not the recipients.

Answer 7

how is it fair for someone to pay taxes on money or estate all there life and then when they die it gets taxed again. that's what is illegal so why not do something illegal, our government is ok with doing it

Answer 8

It's called fraud. If you want information on the federal estate tax go to irs.gov and search publications for the federal estate tax explained.

Answer 9

Hi there, just wanted to say, I loved this discussion. Very inspiring answers

Answer 10

I do not know the best way to answer this without offending