What is an inheritance tax?

Inheritance tax, also known as estate tax, is a tax on money or property passed on to beneficiaries upon the death of the donor. In Washington, the inheritance tax is calculated based on the fair market value of the decedent’s estate at the time of death. The tax is then passed on to the recipient, or beneficiary, of the estate. Those who are directly related to the decedent are required to pay the inheritance tax, though the tax rates vary depending on the relationship. In other words, those closest to the decedent, such as a spouse or children, typically pay the lowest rates while those more distantly related, such as cousins, pay higher rates. Additionally, there are certain thresholds that must be met before the tax is due; generally, the tax is not paid until the estate value exceeds a certain amount. Inheritance taxes are used to help fund essential public services in the state. In Washington, the revenues from the estate tax are used to fund public education, health care, and other public services. It is important to note that the inheritance tax does not necessarily affect all estates equally. Certain exemptions may be available to charity organizations or family farms, allowing them to be free from taxation. Additionally, many states, including Washington, allow for certain credits to be applied, which can reduce the overall inheritance tax burden.

Related FAQs

What is a trust?
What is a living will?
What is a durable power of attorney?
What is a testamentary trust?
What is a trust fund?
What is a trust deed?
What is a spendthrift trust?
What is the role of an attorney in an estate plan?
What is a healthcare power of attorney?
How do I wind up an estate?

What is an inheritance tax?

Related FAQs

Related Blog Posts