Inheritance Taxes and Recipient Class

Several states impose their own inheritance tax that is separate from the state estate tax. The inheritance tax typically depends on the recipient for the assets. Recipient classes are entered on a per-state basis in the State Death Tax Manager.

When you select a state that imposes an inheritance tax, a button labelled Recipient Class appears next to the Domicile input. Click this button to select the recipient class and enter other information relevant to that state's inheritance tax calculation.

Percent of Nonmarital Trust that is Taxable at First Death

In some states, a life estate or other interests of the surviving spouse in a trust may be exempt from tax, so only the value of the children's interests are taxable. Enter the percentage of the unified credit or nonmarital trust that should be considered taxable upon the death of the first-to-die. This input is only enabled if the recipient class you've selected allows some portion of the nonmarital trust to be taxed at the first death.

Percent of Retirement Benefits that are Taxable

In some states, only retirement benefits attributable to employee contributions are subject to tax, while the benefits attributable to employer contributions are exempt from tax. Enter the percentage of any retirement plan or benefits that should be considered to be taxable. This input is only enabled if the recipient class you�ve selected allows some portion of the retirement benefits to be taxed.

Number of Beneficiaries

In some states, the number of beneficiaries affects the calculation of the inheritance tax. If this input is only enabled when it is relevant. Otherwise it is grayed out.