Understanding the rules for inheritance tax in Kansas can be very important. When you make an estate plan, you want to know whether your death is going to trigger any taxes on the wealth you are transferring to your loved ones. If you are inheriting money or property, it is helpful to know what to expect and whether taxes could reduce the amount you inherit.
The Parman & Easterday team can assist you in understanding the tax rules about which you need to be aware, either when you plan your legacy or when a loved one has died and you stand to inherit. Not only can our legal team help you understand how inheritance tax works, but we can also assist you in taking steps to reduce the amount of tax you are going to have to pay. Give us a call to find out how our legal team can help you protect assets from taxes after a death.
Do You Have to Pay Inheritance Tax in Kansas?
The good news is that normally, no one will pay an inheritance tax in Kansas because Kansas does not assess an inheritance tax or an estate tax.
Estate taxes and inheritance taxes both can substantially reduce the value of an inheritance, but they work differently. Estate tax is based on the value of the estate. If an estate tax is assessed on money and property, it will not include the value of property left to a spouse. In addition, estate tax is paid by the estate, not by those who inherit. On the other hand, inheritance taxes in those states where such a tax is collected, are based at least in part on who inherits what. Inheritance taxes are also paid in a different way: instead of being paid by the estate like estate taxes, inheritance taxes are paid by those who inherit.
Since neither type of tax is charged in Kansas, you normally will not have to worry about the rules for either. However, there are other states that charge inheritance taxes, estate taxes, or both. As the Tax Foundation explains, Washington D.C. and 15 states have an estate tax and six states have an inheritance tax. In two states, Maryland and New Jersey, there is both an estate and inheritance tax, so a substantial amount of money could be taken by the government after a death.
You should be aware of the rules for estate tax and inheritance tax in other states, even if you live in Kansas, in case you own valuable property in these other states or stand to inherit property in such states, especially if the property is of significant value. In Nebraska, for example, the Tax Foundation reports there is an inheritance tax of between 1 and 18 percent.
You also need to understand the federal estate tax rules. While Kansas will not make you pay taxes, the IRS imposes an estate tax that the estate will have to pay if the total value of assets in the estate exceeds a certain dollar amount. As of 2017, that dollar amount is $5.49 million. If you will be transferring assets to someone besides your spouse and the value of your estate exceeds $5.49 million, your estate may have to pay tax to the IRS. An experienced attorney can assist you in identifying ways to reduce or avoid estate taxes so you do not have to worry about losing your wealth.
Getting Help From An Estate Tax Planning Lawyer
When you earn income and you build wealth by making acquisitions during your lifetime, you pay taxes as you go. Because you’ve already been taxed, it can seem unfair that taxes must again be paid after your death. Estate and inheritance taxes can also impose a substantial burden in situations in which assets being left to heirs are such things as farms or family businesses. The estate may appear valuable on paper because of business assets or farmland, but there may not be enough liquid assets to actually pay any taxes that are due. This could result in a need to take loans, sell land, sell a company, or sell its assets.
Parman & Easterday can help you establish an estate plan that will reduce or avoid taxes and can assist those who are inheriting property or money to understand their tax obligations. Give us a call today at (405) 843-6100 or (913) 385-9400 or contact us online to find out more.