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Indiana inheritance tax and federal estate tax
Blog April 29, 2015: Indiana inheritance tax and federal estate tax
The Story: John and Mary were husband and wife. Together they owned $10,000,000 in jointly held assets such as real estate and bank accounts. They had not made any taxable gifts. John died in 2013. Mary died in 2014 and left her estate to be divided equally among their four children.
Question: Are there any inheritance taxes due to the State of Indiana and are there any estate taxes due to the IRS?
Answer: No. Indiana inheritance tax was repealed for individual dying after December 31, 2012. This means there is no inheritance tax due to the State of Indiana on an estate of any decedent who died after December 31, 2012.
There was no estate tax due to the IRS. The federal estate tax exemption for John’s estate in 2013 was $5,250,000 and Mary’s estate in 2014 was $5,340,000. Beginning January 1, 2011 estates of decedents survived by a spouse may elect to pass any of the decedent’s unused exemption to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse.
When John died in 2013 his entire estate went to Mary because the assets were jointly owned. There was no federal estate tax due to the IRS because Mary was his wife. In this case, Mary elected to pass John’s unused exemption in the amount of $5,250,000 to her by timely filing Form 706. When Mary died in 2014 the federal exemption for her estate was $5,250,000 + $5,340,000 = $10,600,000.