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Inheritance taxes are paid not by the estate of the deceased, but by the inheritors of the estate. For example, the Kentucky inheritance tax "is a tax on the right to receive property from a decedent's estate; both tax and exemptions are based on the relationship of the beneficiary to the decedent." [52]
For Federal income tax purposes in the United States, there are several kinds of trusts: grantor trusts whose tax consequences flow directly to the settlor's Form 1040 (U.S. Individual Income Tax Return) and state return, simple trusts in which all the income created must be distributed to one or more beneficiaries and is therefore taxed to the ...
The income tax rates for trusts runs from 10% to 37% in 2023, depending on income level. Long-term capital gains are taxed at between 0% and 20%, based on total gains.
The federal government does not charge an inheritance tax, but it does have an estate tax. Unlike an inheritance tax — which the heirs pay out of their inheritance, the deceased person’s ...
Inheritance tax has been argued to be preferable to income tax on work or land value tax. [9] Arguments against inheritance taxes include loss aversion to kinship. [9] Differences in inheritance taxes on trusts and estates of natural persons have been described by one article as inequitable. [10]
The federal government imposes an estate tax but not an inheritance tax; some states impose an inheritance tax. The federal estate tax has a high exemption threshold, exempting most estates from ...
Income, gift, estate, and generation-skipping transfer tax planning plays a significant role in choosing the structure and vehicles used to create an estate plan. In the United States, assets left to a spouse who is a U.S. citizen or any qualified charity are not subject to U.S. Federal estate tax.
A living trust is a common solution for many people with estate planning needs. However, few people know about its tax-filing requirements. Generally, any trust with at least $600 in annual income ...