Frequently Asked Questions (FAQs)
Taxes
Is my inheritance taxable?
As a general rule, no. However, if what you “inherit” consists in whole or in part of deferred income, that income will be taxable. For example, if your parent dies and names you as the beneficiary of an IRA, the IRA is taxable to you. There may be opportunities available to defer the tax which you should fully explore before claiming the IRA.
Second, if there is net income received by the estate or trust for the period from death until distribution, you will be liable for your part of that income. Most times, however, as a result of expenses incurred in the administration of a trust or estate, the expenses exceed the income. In either case, at the conclusion of administration, you will be issued a “K-1" which will advise you of the income you must report, or the share of the “excess deductions” you can report, on your personal income tax returns.
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FAQ Categories
- Living Trust
- Living Trusts and Probate
- Funding a Living Trust
- Bank Accounts
- Powers of Attorney
- Conservatorships and Guardianships
- Alternatives to Conservatorships and Guardianships
- Medicare and Medi-Cal (Medicaid)
- Probate
- Taxes
- Disqualified Beneficiaries
- Joint tenancy, Community Property, Domestic Partnerships