Inheritance Tax Law at a Glance
In the United States, many states have established inheritance tax law, which allows the state to collect an inheritance tax on certain assets inherited by an individual following the death of a benefactor. When an individual inherits property and assets, the inheritance will be taxed. As a result, the state will receive a specified portion of the inheritance and the beneficiary will not receive the total amount left to him/her.
Each state maintains unique inheritance tax laws, and therefore, the associated regulations vary significantly from one state to another. Generally, an inheritance tax is only warranted if the assets inherited value a specified amount. Therefore, only large estates and inheritances are subject to inheritance tax. Inheritance tax functions on the state level, while estate tax operates on the federal level. An individual should be aware of the inheritance tax law in his/her state when planning his/her estate, or when inheriting assets from a benefactor.