The worth of a person’s possessions at the time of their death is subject to both estate and inheritance taxes. In contrast to inheritance taxes, which are paid by persons who inherit property, estate taxes are paid by the estate itself before assets are dispersed to heirs. Both taxes are frequently combined with a “gift tax” to prevent them from being avoided by selling the asset before death.
Estate and inheritance taxes discourage investment because they are almost solely levied against a nation’s or state’s “capital stock”—the accumulated wealth that makes it richer and more productive as a whole.
Both taxes are complicated, difficult for jurisdictions to manage, and may tempt wealthy people to flee a state or their country altogether or engage in wasteful estate planning.
For these reasons, the majority of American states have abandoned estate and inheritance taxes.
The tax laws are very complex. Our short blog articles cannot cover in full all the nuances of the rules. Your specific facts may hold various opportunities and possible risks that only trained, experienced, and highly qualified tax specialists can spot. We encourage you to find such help, rather than trying to figure it all out on your own. Consider giving this marketplace a try by posting your project and signing up here.
If you are a licensed tax professional and are interested in helping others either part or full-time, or ad hoc, come on in! Happy to have you. Our marketplace has the full suite of tools to communicate with clients including compliance calendars, task and message management, and billing. You can also quickly connect to knowledgeable colleagues who can complement your services with the ones you do not provide. Register here.