how does a state tax a decendents estate.?

Question

how do the individual states in the United States tax a persons estate when they die?? is the estate always the one responsible for paying the death tax or is the liability for such tax transfered to the heirs in some states?? what are the differences and types of death taxes (US only) i am referring to a decendents after tax assets such as a bank account,. i am NOT referring to tax advantaged or tax deferred monies such as 401k, 403b, 457plan or a traditional ira

Answer 1

Estate taxes are levied on the net worth of the estate. Typically a portion of the net worth is excluded from taxation. The Federal exclusion is currently $2 million. Each state that levies an estate tax has their own exclusion amounts and tax rates so you'd have to check with the individual state's tax authorities for that information.

The estate is ALWAYS responsible for payment of any estate taxes. It is NEVER transferred to the heirs.

Answer 2

A federal and/or state estate tax return is filed when the persons estate is over a certain net asset level (assets less liabilities). The estate is responsible for paying the death tax if any, although if the assets from the estate have already been distributed to the heirs the estate may have to get the monies back from the heirs in that case. As far types of death taxes, pretty much everything that the decedent owned is included in the estate value; house, cash, stocks, bonds, collectibles, automobile, retirement accounts, life insurance, etc. And also pretty much what the decedent owed is also included; funeral costs, medical costs, unpaid bills, etc.

Answer 3

If the state has an estate tax, it is always paid by the estate. Some states have an inheritance tax. That is a tax paid by the heirs on what they inherit. For the purposes of either, there is no such this as before and after tax assets. Some assets may pass outside of the estate, but assets in the estate are treated the same for estate tax purposes.

Answer 4

Most impose no estate taxes anymore due to a recent change in Federal estate tax laws. A few still do in which case the tax is paid from the estate. And a few others still impose inheritance taxes based upon relationships. Although the heirs technically owe these taxes they are paid from the estate too under most wills that say so.

Answer 5

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