inheritance tax

inheritance tax   n.  A tax imposed on the privilege of receiving property by inheritance or legal succession and assessed on the value of the property received. Also called death tax.

Inheritance Tax

In some states in the U.S. (and in the United Kingdom), a tax imposed on those who inherit assets from a deceased person. The tax rate for inheritance taxes depends on the value of the property received by the heir or beneficiary and his/her relationship to the decedent.

Investopedia Commentary

Inheritance tax is not the same as estate tax, which is imposed on the total value of a person's estate when that person dies. Rather, inheritance tax is imposed on the property that is passed to an heir.

Inheritance tax is known in some countries as a 'death duty' and is occasionally called 'the last twist of the taxman's knife'.

Related Links

Get Ready For The Estate Tax Phase-Out
Who Is The Beneficiary Of Your Account?
Skipping-Out on Probate Costs

See also: Beneficiary, Charitable Remainder Trust, Estate, Estate Tax, Heir, Inheritance, Intestate

Also spelled: death duty

inheritance tax

A state tax levied on the recipient of an estate rather than on the estate itself. The tax varies by state and its severity in a given state usually depends on the kinship between the deceased and the heir. Some states levy a tax on the estate instead of a tax on the amount inherited. Compare estate tax. Also called death tax.

How can I minimize inheritance tax? Estate and gift tax law is in a state of flux. An estate planning attorney will have the most up-to-date information available to assist you in minimizing your tax liability. Avoiding probate should also be a goal. Joint ownership, revocable living trust, irrevocable trusts, and life insurance may be useful tools to avoid or eliminate the estate tax and costs of probate, but only an experienced estate planning attorney can help you decide which of these tools will suit your needs best. Gloria Cole, Attorney, private practice, Weston, MA

Main Entry: inheritance tax
Function: noun
: an excise tax that is levied upon the privilege of receiving property as heir or next of kin under the law of intestacy and that is measured by the value of the property received —compare ESTATE TAX