After the passing of a loved one, money is probably the last thing on your mind. However, when it comes to inheriting money from a deceased family member, it is important that you understand what portion of that money is subject to federal or state taxes. Likewise, when ensuring you understand what amount of your inheritance may be taxed, it is crucial you comprehend the difference between estate tax and inheritance tax.
Cardon Law is a Pleasant Grove real estate and business law firm with over 15 years of experience helping clients understand how to best plan their estate in order to avoid paying high taxes. We know that trying to comprehend the difference between estate tax and inheritance tax can be stressful. That is why Attorney Jeffrey Cardon provides dedicated legal counsel to help you understand your rights and how these taxes may affect your estate.
Understand the Difference Between Estate and Inheritance Tax
Inherited assets like property or money are not classified as income for federal tax purposes. However, state taxes on inherited assets may vary. It should be noted that income earned based on any assets inherited may be taxed by federal and state governments unless derived from a tax-free source.
Even after they have passed, loved ones may still have remaining taxes they owe. These taxes may be taken out of the money left behind by the deceased. However, to better understand how your inheritance may be affected, you need to understand the difference between the estate tax and inheritance tax.
Inheritance Tax
An inheritance tax is a state tax in which the beneficiary must pay and it is solely their responsibility to pay this money.
Estate Tax
Estate taxes are charged against the estate, regardless of who inherits the deceased person’s assets. The executor is responsible for filing a single estate tax return that will pay the tax out of the funds of the estate. The estate tax is calculated on the total value of the deceased individual’s assets and is to be paid before any distribution of the remainder of the inheritance is paid to the beneficiaries.
Is a Lawyer Necessary When Estate Planning?
It is always in your best interest to consult an experienced estate planning lawyer who can help guide you on strategies for reducing taxes as you pass your assets to your beneficiaries. Taxes, whether they are inheritance or estate, must be considered when partaking in estate planning. By doing this now, you can plan ahead to ensure that more of your legacy goes to your family after you have passed. When you work with a trusted estate planning lawyer, they can help you in the following ways:
- Answer any legal questions or concerns you may have
- Provide legal assistance throughout the estate planning process
To ensure your estate can reach its fullest potential and not be hindered by taxes, get the help of a Pleasant Grove lawyer today.
Contact a Pleasant Grove Estate Planning Lawyer For Help
At Cardon Law, our clients will have access to the resources and legal advice from an experienced and dependable Utah estate planning lawyer. Jeffrey Cardon has more than 15 years of first-hand experience helping clients navigate the estate planning process from his office in Pleasant Grove.
Regardless of your legal needs in planning your estate, do not hesitate to contact us. Talk with our trusted legal team and find out how we can help you grow your business by calling (801) 225-6700 or filling out our contact form.