Inheritance distribution through Trust. Will I owe taxes?

[thesherrya]

I inherited $110K from My Mother and Fathers Trust. Will I owe taxes on that money?

[KarenL4 · Accepted solution]

Hi,  thesherrya,

First, sorry for your loss.

Also, great question!  You will not have any federal inheritance tax on your inheritance.  The federal government doesn't have an inheritance tax. As of 2023, six states currently impose an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.

You don't say what your inheritance is made up of.  If it's life insurance, it's possible, but unlikely, that the life insurance can be subject to estate taxes.  This article explains more about those unlikely incidences.  If you inherited property, it will be important to capture the basis of inherited property.  Here's an article about that topic.  If you inherited a retirement account (e.g., and IRA), I refer you to this answer to another question that may be helpful.

Don't hesitate to post again if you have more questions.

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Regards,

Karen

[thesherrya]

Thank you, this helped a lot. Very clear answer.

[KarenL4]

You are most welcome!