Inheritance Tax
The United States is somewhat unique in that it taxes the transfer of property from a deceased person to beneficiaries. This levy is known as the inheritance tax.
Inheritance Tax
Often referred to as the “death tax,” the inheritance tax is extremely controversial and exceedingly punitive. The tax was assessed on the property, whether money or hard property, received by a beneficiary of a person’s estate. The inheritance tax was paid by the actual beneficiary, such as a surviving child, not the estate of the deceased person.
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The inheritance and estate tax system resulted in a double penalty on the transfer of assets to family members. To pay the taxes, most of the assets had to be sold. This resulted in stable, profitable businesses being liquidated as well as extremely frustrated family members. The double taxation process would often result in the loss of as much as 90 to 95 percent of the assets owned by the deceased person. In short, it was a complete nightmare.
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Fortunately, the federal government no longer collects the inheritance tax and hasn’t done so since 1916. It has been replaced by the equally maligned progressive estate tax system. While this may sound like a positive step, it really just constitutes the two taxes being combined into one.