A death tax is associated with any tax imposed on someone’s property after they pass away. This is a colloquial term that got popular in the 1990s to describe inheritance and estate taxes. In estate taxes the estate belonging to the deceased will pay the tax before the assets are transferred to the beneficiary.
However, with the inheritance tax, the person who inherits those assets pays. The estate tax is charged by some state governments and the federal government based on the total value of assets and property at the time of the owner’s death.
This can range in 2022 from 18% to 40% of the inheritance amount. In August 2022, there are 12 different states that impose a state estate tax aside from the federal government. These are Maryland, Connecticut, Maine, Illinois, Hawaii, Minnesota, Massachusetts, Oregon, Vermont, Rhode Island, New York, Washington and the District of Columbia.
Inheritance taxes are not imposed by the federal government, but several different states do impose these, namely Nebraska, Kentucky, Iowa, Maryland, New Jersey, and Pennsylvania. In all of these states, however, there is an important exemption associated with property passing on to a surviving spouse, but in some cases, taxes can be imposed in Pennsylvania and Nebraska for property passing on to a child or grandchild.
In some cases, owning property in other states but being based in California could trigger more complicated probate issues. When you sit down with a Pasadena estate planning attorney, discuss all the assets inside your estate and get clarity on how these might be affected by estate planning.
To make sure that your estate plan incorporates all of your unique goals, set aside the time to work with a knowledgeable lawyer.