Legal Question in Wills and Trusts in California
Tax on Inheritance
My grandparents who are in there late 90's. Have a Living Trust Will and have left everything to my father (who died) or his decendents and his sister. So it seems I will be getting my fathers share. I'm assumming that everthing is being taxed and the taxed amount is then withdrawn by the government before dispursal to my Aunt and I. And then upon receiving the money we would then have to pay income tax. Are these assumptions correct? Or what is correct?
1 Answer from Attorneys
Re: Tax on Inheritance
No. Estate and gift tax is only on those portions of the estate that exceed $2MM, this year and in 2008, and $3.5 MM in 2009. If hey die in 2010 there is no tax, period, and in 2011 and beyond, the exempt amount is $1MM. If your grandparents have a properly drafted trust with a QTIP provision, they will be able to double the amount they can give together, tax free. Less that 1% of American families will have to pay any estate tax. Income tax will be due, but only on those amounts earned after their death, or on those amounts which are presently in qualified retirement accounts such as 401k's and IRA's.
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