A question often presented to me by some clients is whether or not there is an inheritance tax imposed upon the client’s beneficiaries after his or her death. Both in Nevada and federally, there is no tax imposed upon a beneficiary who receives a deceased person’s property. Currently, there are a minority of states that do impose such a tax. The tax rate usually depends upon who inherits the property, and property passing to a decedent’s spouse or to other close relatives is typically taxed at a very low rate or not taxed at all.
Inheritance tax should not be confused with estate tax. The difference between inheritance and estate tax is a matter of who is responsible for paying the tax. Estate taxes are levied on the total value of a decedent’s property and must be paid out before distributions are made to the decedent’s beneficiaries. Whereas, the inheritance tax is calculated separately for each individual beneficiary, and the beneficiary is responsible for paying the tax. Fortunately, Nevada does not impose an estate tax upon a decedent’s property. Federally speaking, there is an estate tax, but there are significant exemptions that currently exist.
If you should have further questions regarding estate tax, inheritance tax, or estate planning matters please feel free to contact the attorneys at Jeffrey Burr.