A Quick Look at Inheritance Taxes
Proper planning can help prevent unexpected outcomes
Things you need to know about Inheritances
Inherited traditional IRAs are generally taxable to a beneficiary.
Beneficiaries (other than a spouse) must distribute the IRA funds and pay taxes on the distribution.
The entire IRA must be distributed by the end of a 10-year period.
Spouses have other options including rolling the distributions into their own IRA or treating the IRA as their own.
Roth IRAs are inherited tax-free. Inherited money or cash equivalents are not taxable.
Generally inherited securities, real property, and other assets are received without any tax liability. But when sold, the subsequent gain or loss is measured from the inherited basis.
Inherited basis is the fair market value (FMV) of the asset at the time of the decedent’s death.
Generally, all inherited assets are immediately treated as held long-term and benefit from long-term capital gains rates.
There are some exceptions to the rules.
For more information on inheritance taxes, read Inheritances Enjoy a Special Tax Benefit.
Please contact this office for additional details.
