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Estate And Inheritance Taxes – How To Manage Them

The State Government levies inheritance tax which is paid by the inheritor. While inheritance tax can vary from one State to the next, Estate Tax is not. You can find the right inheritance tax rate online before you proceed.

The Estate Tax must be paid before the Estate can be divided among the beneficiaries. Only then can the remainder be distributed to the beneficiaries. The Executor is responsible for the payment of the Estate Tax. The Executor is responsible for ensuring that the estate or any portion thereof goes to the right beneficiary.

As mentioned, inheritance tax is subject to variation from one State to the next. Some states do not have a tax. There are concessions for beneficiaries where tax is levied. These are usually related to the amount of the beneficiary's relationship to the deceased.

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For example, the spouse or children may pay less tax, while the distance between the deceased and the beneficiary will be higher. If the inheritor is unable to pay the inheritance taxes, the remainder of the estate is liquidated and the tax is paid to the beneficiary.

Sometimes, the testator (the person who draws the Will) might specify that the estate would pay the inheritance tax and the tax on the estate. This eliminates much of the complexity that can sometimes be associated with a deceased's estate. However, the Will may specify who will receive the inheritance.

Depending on how the Will was made, estate duty and inheritance tax can be complicated. It is best to seek the advice of an expert and/or financial planner when there is a lot at stake.