I just inherited a large sum money from my late father how much should I expect to pay in taxes?

Question

I just inherited a large sum money from my late father around 700,000 dollars......I am only 22 and I was wondering what I can expect to pay in taxes on this, someone told me that I would'nt have to pay taxes since it is an inheritence but that sounds to good to be true to me, also is there a safe way to invest//safe guard my money my checking account only insures moneys up to 200,000 dollars.

Answer 1

You will not be taxed on your inheritance, only money that is made off of it (for example, if you inherit stocks, you will not be taxed on the value of the stock, but if you sell the stock, you will be taxed on the amount you make that is above the value of the stock on the day your father passed away). You should probably make an appointment to see a CPA (not just any accountant) for advice about wisely investing your money. If nothing else, make sure you don't put it all in one bank so that it will be insured. You can open savings account at several banks until you figure out what you're going to do with it.

Answer 2

It's true, at least at the Federal level, that that money is tax free to you. A few states do still have inheritance taxes, though in most cases the estate would have paid those on your behalf. The executor should be able to tell you if any state inheritance tax was paid on your behalf, and your state tax authorities can tell you if there is an inheritance tax.

Bank deposits are only insured by the FDIC up to $100,000 per depositor. A checking account would be safe but a lousy place to put it because even if it paid interest it would be a platry amount. Even putting it in a CD at a bank would generate enough income to live fairly comfortably in most parts of the country.

A better bet would be to consult with an independent Certified Financial Planner. You want a fee-based professional who does NOT sell any type of investment products but sells advice and counselling tailored to your individual situation. With a careful mix of investments your principal will be safe and you can generate enough income to live comfortably without ever having to work another day in your life, should you choose to do so.

Answer 3

No federal tax on inheritances. Depending on where you live, it's possible that there's a state inheritance tax - check with the lawyer handling the estate - I assume that since it's that large, there is a lawyer involved.

FDIC only insures $100K per person per institution, so even the $200K you mention is probably not really insured. But with that kind of money, you don't really want most of it in a bank anyway, you probably want the bulk of it invested, maybe in mutual funds. If you aren't familiar with various investment options, you might want to talk to a certified financial planner. Be careful though - many places just about anybody can hang out a sign claiming to be a financial or investment advisor.

Answer 4

no tax on inheritances in America. -- true

large estates pay taxes, but they do so before the heirs see any of the money, so it isn't your lookout.

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safe way to invest -- most stock brokerages offer or can access a near cash fund which invests only in short term US government securities. While the yield isn't much -- just above the rate of inflation -- this is about as safe as you can get. [many US government securities can be submitted in payment of your taxes, so their value is fully guaranteed at maturity.]

Vanguard Funds group probably has a similar fund that you can buy into directly. [see their website]. Vanguard regularly has the lowest cost funds out there, which saves you directly.

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You would be well advised to prepare or pay someone [who isn't a salesperson getting a commission] a lifetime financial plan. With an estimated 700k starting capital at age 23 your plan should be able to build a retirement for you without significant difficulty.

Assuming that's what interests you. Discovering your interests and desires is part of such a plan -- in fact, the first step in such a plan. [you can't map out a route until you know approximately where you're going].

GL

Answer 5

Any taxes due from the inheritance are paid out of your father's estate before you receive the balance. Check with the executor of his estate.

You can bank the money in FDIC-insured accounts. Just split it up into enough accounts to stay under the "per account" limit. And DON'T put it in your checking account!! At least put it in CDs until you figure out how to invest it.

Answer 6

Yep no tax. I recommend you to invest in mutual funds though. Don't put it in a savings acct giving u 2% return, instead put it in a mutual fund which will earn you 12% annd above, and if you really want secure money, try a money market, because they are nsured through banks, but they wont earn quite as much as mutual funds.Look, if you need any advice, email me, I'm not trying to scam or any crap like that, I just think you should invest it in something that can give you high returns!!

Answer 7

Yes It is their money. Not the Federal governments. Cap gains are not automatic. You can actually lose money on investments. Dividends are not given on a regular basis by corporations and only done in good times. What makes you think that their money will never run out while trying to maintain their holdings? God you must not own much. Pathetic!

Answer 8

You need to find a good investment counceller
deversesify
I believe the gov changed the inherit tax so that no
under a (1) million.....check it out!!!
PS By the way are you married!!!!!!!??