Many people do not realize that that power of attorney that they used to take care of their loved one's finances lifetime, when they were unable to do so for themselves is no longer effective at the death of the principal.
There are also the different tax ramifications that govern a decedent estate. There are two distinct types of taxes that may be imposed by a state where the person is a resident at the time of their death. An estate tax may be imposed on the estate of an individual before the property is transferred to the beneficiary. There is also the inheritance tax. This tax is imposed on certain individuals who inherit property from an estate. Whether a state estate tax or inheritance tax must be paid, is dependent on the laws of the state where the person was a resident at the time of death, not the state where the beneficiary lives.
The estate of a person who is a resident of New York and dies between April 1, 2017, and Dec. 31, 2018, is subject to a New York estate tax, only if the value of the estate exceeds $5.25 million. On January 1, 2019, the New York estate tax exemption will equal the federal estate tax exemption. It is anticipated to be about $5.9 million.
In some states, the relationship between the testator and the heirs may make them subject to an inheritance tax.
If the relative, for example, owns real property in New Jersey, there’s an inheritance tax of 15% imposed by the state on the value of that real property. When a person inherits the estate assets, there would be a step-up in basis for any appreciated assets. This means that there shouldn’t be any capital gains tax on those assets if they’re disposed of for the date of death values.
Talk to a qualified estate planning attorney to understand the consequences for you and your family member's estate.We are here to assist you with that by calling us at 757.259.0707 or 'requesting a consultation' online.
Reference: NJ.com (June 6, 2017) “Inheriting money from out-of-state relative”