http://www.paestateplanners.com/ Pennsylvania estate planning lawyer David Frees addresses tax consequences of receiving an inheritance. The main question that beneficiaries have to consider is whether they will have to pay income tax on the money.
The simple answer is “no.” With most inheritances, the Will instructs the executor to pay all federal estate taxes and inheritance taxes before you receive your share of the inheritance. Once this is paid by the executor you generally are not responsible for income tax on the money you receive.
There are certain situations you should be aware of. If you are receiving an IRA or a 401(k), you might have taxable liabilities. If the estate is large, then the estate may generate taxable income.
These are all questions you should ask the executor or the executor’s attorney. You need to ask him or her whether you will be responsible to pay any income tax on your inheritance.
At the law firm of Unruh, Burke & Frees, we can answer these questions. You can find out more by calling one of our Pennsylvania estate planning lawyers. They can help guide you on what, if any, tax consequences you might be responsible for if you are expected to receive an inheritance.
To find out more about tax consequences regarding your inheritance, you can order a free copy of the informative guide, Enhanced Estate Planning: What You Need to Know About Hiring An Attorney & Creating A Plan That Works. http://www.paestateplanners.com/practice_areas/asset-protection1.cfm.