Inheritance

As people become more globally mobile, financial advisors and tax consultors are being asked question about inheritance tax relating to properties inside the United States. In brief, the Federal government doesn’t impose inheritance taxes on bequests. However, U.S citizens, resident and nonresident aliens may be subject to U.S estate and gift taxes.

The Estate Tax is a tax on your right to transfer property at your death. The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The gift tax applies to the transfer by gift of any property. Estate and gift tax rates currently range from 18% to 40%. The rates are the same whether you are a U.S citizen, resident or nonresident alien. All tax payers may be entitled to annual and lifetime gift tax exclusions and a credit on the applicable estate tax exclusion amount. The following table summarize the exclusion amount in 2018 that can be transferred.

On the side, some states impose an additional estate tax or inheritance tax. Fourteen states and D.C have an estate tax and six states have an inheritance tax. In 2017, the top rate of estates tax was imposed from 16% to 20% differently in each state. And, the top rate of inheritance tax was imposed from 10% to 20%. New Jersey will fully phase out its estate tax by 2018.