What are the tax implications of inheritance?
In Hawaii, the tax implications for inheritance depend on the type of asset or property being inherited. For example, beneficiaries of real estate will have their inheritances taxed by the state’s real property tax. This tax is assessed annually and is based on the property’s fair market value at the time of the decedent’s death. Inherited stocks and bonds are also subject to a transfer tax in Hawaii. This tax is based on their fair market value at the time of the decedent’s death and is paid by the estate or trust responsible for distributing the assets. Inherited cash may also be subject to income taxes. If the estate is large enough to be subject to federal estate tax, the beneficiary will have to pay taxes on the income earned from any inheritance in the form of cash or investments. Finally, the Hawaii estate tax applies to all estates valued over $5.49 million. The estate tax rate is progressive, ranging from 11% to 20%. The estate or trust responsible for distributing the assets will be responsible for paying the estate tax. In summary, the tax implications of inheritance in Hawaii vary depending on the type of asset being inherited. Real estate is subject to the state’s real property tax, stocks and bonds may be subject to a transfer tax, and any inherited cash may be subject to income taxes. Additionally, estates valued over $5.49 million are subject to the Hawaii estate tax.
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