by Brandi Savitt – March 15, 2012
Inheriting Money 101
I’m so enjoying catching up on episodes of my new – not so guilty – TV pleasure, Downton Abbey! Watching this British based period drama, I can’t seem to shake the thought of the arcane, sexist inheritance laws that haunt the Crawley family. –Don’t worry, I won’t spoil the show…
For those of you not familiar with Downton Abbey, the series begins in England during the years leading up to World War I. The show touches on so many money related issues, it’s mind boggling, but the family’s main money conflict is two fold…
The Earl of Grantham (and head of the family estate), Robert Crawley, is married to Cora, an American heiress. To ensure that Cora would not divorce Robert and take her money with her, Robert’s father made a deed of transference that locked Cora’s money into the family’s estate. At the time, no one involved worried about the possible consequences. The couple was expected to produce a male heir who would inherit Robert’s title and therefore keep all of the family’s wealth intact. The problem… Robert and Cora had three girls, and in England, girls could not inherit their father’s title or estate. Now, in order for the family to keep their money, Mary, the eldest daughter, must marry the next inline to inherit Robert’s title: her cousin… Bummer (or maybe not)?
While we thankfully don’t have the same disadvantages today as the Crawley women, there are a few things you should know if you find yourself named as a beneficiary in someone’s last will and testament…
Taxes Not Title
Inheriting money in modern America has nothing legally to do with titles, birth order or sex. It’s state and federal TAXES that become the most complicated issue. Passing assets to a loved one can be extremely expensive if not properly planned for. According to attorney Tom Hession of New York’s Hession, Bekoff, & LoPiccolo, “if you own anything of significant value, consulting with an estate planning expert to avoid unnecessary taxes can be worth the price in gold.” –Keep in mind, while every state has slightly different capital gains and tax laws, the federal government has extended that there is NO Estate Tax due on inherited money through the end of 2012 (of course this is subject to change next year).
If you inherit money or property, the burden to pay the transfer tax is not on you, but rather the estate of the person who has passed away. If you inherit anything of any amount this year, there will be no transfer tax due to the IRS – therefore giving you more money in your pocket. Regardless of when you inherit money or property, a flush, well planned estate will have the means to pay any taxes and debts before passing assets to its beneficiary.| Print
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