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What is an Inheritance Tax in Indianapolis?


— February 28, 2023

Depending on the individual situation, these taxation issues may be handled by a firm that focuses on probate or estate planning instead of just tax law.


Indianapolis, IN – It is common for families to transfer wealth between members. In fact, most Americans who become well off financially do so through inheritance rather than their personal income. However, whenever a person or business receives money, the government wants to get involved. The government can potentially tax various kinds of inheritance, although the rate and amount can vary, and some individuals or families may not owe any taxes on their inheritance at all. Lawyers are always a valuable source of information when it comes to figuring out how inherited money can affect a person’s taxes. 

Federal inheritance taxes

Regardless of what state the person lives in, the federal government will tax some transfers of property that can happen either during life or after death through wills and intestacy. However, most transfers that are worth smaller amounts may not be taxed at all, and they may be considered gifts. Indianapolis tax lawyers can advise local clients regarding their federal tax burden on an inheritance. It is also important to get advice that is timely for any inheritance transfers, as Congress can change the inheritance tax rate. 

Exceptions to the inheritance tax

As a general rule, one spouse can transfer wealth to the other without having to worry about inheritance taxes or exceeding a gift amount. Estates that are worth several hundred thousand dollars or less will likely not be subject to an inheritance tax either. However, it is best for a person who is about to inherit or someone who has already inherited money and property to speak with Indiana tax lawyers regarding how this may affect their return. Tax lawyers can also provide advice regarding how to file to avoid owing money to the IRS or failing to report required sources of income or inheritance. 

Overlap with estate planning issues

Man in blue suit signing papers; image by Leon Seibert, via Unsplash.com.
Man in blue suit signing papers; image by Leon Seibert, via Unsplash.com.

There are attorneys who handle matters related to wills and items that go through probate court. Estate planning lawyers are also a valuable source of information for questions about inheritance, as their practice is focused on issues related to wills, trusts, life insurance, and related documents. Depending on the individual situation, these taxation issues may be handled by a firm that focuses on probate or estate planning instead of just tax law. It may be beneficial for the estate planner to set up a trust for a more favorable tax outcome than a will or other testamentary instruments. This should be done in advance of any problems, and a trust can be set up to start paying out wealth while the testator is still alive. 

More information is available from a local law firm

USAttorneys.com is a website that works with people who need to find lawyers in their area. Anyone who wants a referral to a licensed attorney can call 800-672-3103 for assistance. 

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