Inheriting? Know These Rules Before You Sell

By Dana Anspach via

When a client asks about inheritance taxes “it depends” are usually the first two words out of my mouth. Many people don’t realize that inherited assets—property, stocks, investment accounts, etc.—may be subject to taxes and that there are specific tax rules for each type of asset or account. So before you sell Uncle Oscar’s rare wine collection, make sure you know the rules!

We are not talking here about estate taxes. Estate tax is assessed on the total value of everything you own; real estate, stocks, bonds, retirement accounts, businesses, farms, land, and it even includes the death benefit values of any life insurance policies owned by you. With the recently changed estate tax rules, estate taxes will only impact singles with an estate of $11M or more, or marrieds (if they’ve completed proper planning) with an estate worth $22M or more. Needless to say, estate taxes will not affect most of us.

So, if we’re not talking about estate taxes, what are we talking about when we say ‘inheritance taxes?’ We’re talking about various types of income taxes owed on inherited assets. The new tax law has nothing to do with how to navigate this separate issue.

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