Do I Have to Pay Inheritance Taxes on Willed Land?

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“My mother wants to will me some land, do I have to paid any inheritance taxes ? She lives in FL and I live in SC where the land is.”

[NOTE: Articles and answers on DearEsq., while written and published by lawyers, do not constitute legal advice, and no attorney-client relationship is formed by your reading of this information. You should always consult with an attorney for any legal situations.]

Inheritance taxes (at least Federal taxes, and most states that I am aware of) are paid by the estate of the deceased person.  At least in the first place, though they can (by agreement) be shifted to the person receiving them.  So technically, the answer is no: you don’t have to pay estate taxes, though you may receive less if the estate needs to pay them.

According to the internet (which is never wrong), South Carolina does not currently have an inheritance tax, so you’re just dealing with the Federal one.  So the first question is, how much is your mother’s entire estate worth on the date of her death?  Obviously, you don’t know the answer to that one just yet, but you can make an educated guess as to whether it will be more or less than the exemption amount.

The Federal estate tax has an exemption amount: Every person has the ability to transfer a certain amount at death without paying any estate tax.  As we sit now (2012), that amount is $5,120,000 (five million, one hundred twenty thousand dollars).  So if your mother dies this year, the first $5+ million is tax-free, and if her estate is less than that amount (as most are), then no tax will be paid.

Unfortunately, the law next year is not so generous.  Unless Congress takes some action, the exemption next year is only $1 million. Again, if your mother’s total estate is under that amount, you have no problem.

In calculating a person’s “estate” for tax purposes, nearly everything is included, including life insurance in most cases, so don’t leave that out when you’re doing your estimate.

What if her estate is between $1 and $5 million?  Well, your mother’s attorney would be a good place to start talking now, to see if she might want to give away some property this year, while the exemption is still high.



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Author: House Attorney

A house attorney has answered this question.