If you inherit property in Oklahoma or are leaving property to a loved one within this state, you should understand the inheritance tax rules in Oklahoma. While the state does not impose an inheritance or estate tax, this does not mean taxes will not be assessed as a result of a death. You should talk with an experienced attorney about how to protect your inheritance or the wealth you are leaving to loved ones and reduce or avoid taxes altogether.
Parman & Easterday can provide invaluable assistance in explaining your options for tax planning and protecting the wealth you are leaving to loved ones or will be inheriting. To find out more about how to protect against taxes connected to a death, give us a call today.
What are the Inheritance Tax Rules in Oklahoma?
The Tax Foundation explains the inheritance tax rules for Oklahoma and other locations throughout the country. According to the Tax Foundation, only 15 states and Washington D.C. charge estates taxes when someone passes away. Only six states have an inheritance tax, a different kind of tax altogether. Two states – New Jersey and Maryland have both of these taxes: estate taxes and inheritance taxes. Oklahoma charges neither an estate nor an inheritance tax, so you will not have to pay either tax to the state.
Estate taxes and inheritance taxes differ because estate taxes are paid by the estate and do not depend on who inherits the assets. One exception is that a surviving spouse is exempt from state and federal estate tax on property he or she receives. If you leave money to anyone other than your spouse, estate taxes will have to be paid by your estate if the value of the estate exceeds the “excludable” amount that can pass tax free. Estate taxes are not based on who inherits, but on the estate’s value.
Inheritance taxes are paid by the recipient of the inheritance, rather than by the estate. Rules differ among the states that impose inheritance taxes, but usually these taxes are based on the relationship between the decedent and the person inheriting the assets, although other factors may come into play.
It is important for you to talk with an attorney who can explain both estate and inheritance taxes and advise you how to reduce the amount of taxes a death could trigger. This is important if you own property in a state other than Oklahoma, which might charge an estate or inheritance tax, or if you have a larger estate and your death could trigger federal estate taxes.
Do Heirs or Beneficiaries Ever Have to Pay Taxes When Inheriting Money in Oklahoma
Heirs or beneficiaries will not pay any estate or inheritance tax to Oklahoma. But if you live in Oklahoma and inherit valuable property from a state that has such a tax, you or the estate may have to pay taxes on the inherited property. This could result in you receiving a smaller inheritance than expected.
If someone passes away, it is important to determine whether federal estate tax will be due. The federal law taxes large estates that exceed the annual exclusion, currently $11.4 million as of 2019. This means if someone passes away with an estate valued at more than $11.4 million and no asset protection planning was done, the estate will be taxed on the amount of assets that exceed this $11.4 million threshold.
Getting Help from An Oklahoma City Tax Planning Lawyer
Although there is no inheritance tax in Oklahoma, you must consider whether your estate is large enough to require the filing of a federal estate tax return, Form 706. Parman & Easterday will explain the federal rules and advise you whether at your death, or the death of a loved one from whom you are inheriting, an estate tax return will need to be filed.
To find out more about estate and inheritance taxes, give us a call today at (405) 843-6100 or contact us online. You can also join us for a free seminar to get more information about estate tax and the tax planning process.