Legacy Tax Lawyers
What is a Legacy Tax?
A legacy tax is a tax imposed by some states on the property, or estate, of someone who transfers their property by will or intestate succession upon their death. Legacy taxes are sometimes referred to as Collateral Inheritance Taxes. Not all states have a legacy tax. The idea behind legacy taxes is that the government has the ability to tax the estate of the deceased because receiving their property is a privilege. As such, it is taxable, and acts much like an excise tax.
How Do Legacy Taxes Differ from Gift Taxes?
The primary way that legacy taxes differ from gift taxes is the status of the person giving the estate. Legacy taxes deal with situations where the person giving the estate has passed on. Gift taxes deal with situations where the person giving the estate, or part thereof, is still alive.
How Does a Legacy Tax Differ from an Inheritance Tax?
Legacy taxes and inheritance taxes differ in two critical ways:
Who Gets the Property
For inheritance taxes, the deceased gives their estate, through a will or intestate succession, to a spouse, parent, or other family member.
For legacy taxes, the deceased gives their property, through a will or intestate succession, to another person or entity. The recipient of the property could be a friend, neighbor, or even a charity.
How the Tax is Paid
For inheritance taxes, the money to pay the taxes comes from the person who inherits the property. For example, if you inherit property with a value of $10,000 from you parent, you have to pay the appropriate taxes on that $10,000.
For legacy taxes, the money to pay the taxes comes out of the property being given to the recipient. For example, if you inherit property with a value of $10,000 from a friend, the $10,000 will be discounted by the appropriate taxes. You do not personally pay anything for just receiving the property. You may have other tax burdens from the inheritance, but not legacy taxes.
Do I Need an Attorney for a Legacy Tax Issue?
If you are planning an estate and considering the impact of a legacy tax, or have received property from another person through their will or intestate succession and have a tax related issue, it is highly recommended that you contact a tax or estate planning attorney. They will be able to explain the issues and potential problems with your case.
Consult a Lawyer - Present Your Case Now!
Last Modified: 11-30-2011 03:57 PM PST
Did you find this article informative?
Link to this page