People who inherit fortunes should know the limit of their inheritance tax as they are taxed on the inheritance owned. The limits of taxation are measured by many assessments in various directions. If the estate's total value has not exceeded $2,000,000, you are not eligible to pay any tax. However, this limit can differ from state to state. Therefore, you have to check with the local authorized department of taxation to find the limit of the inheritance tax.
The limits of the inheritance tax are based on certain criterions. They include insurance, cash, trust, annuities, business, real estate and other such assets. Earlier, the inheritance tax came as high as 55 percent. Normally, the inheritance tax is applied to assets worth above $1 million.
According to the IRS regulations, inheritance tax can only be levied if the inheritance is worth $3,500,000. When the value is more than this limit, they will be charged 45 percent. The Congress regulated that from January 2011, the estate tax limits would come to the level prior to Bush administration period.
Presently, there are many exemptions of taxation within the inheritance tax laws. To qualify for a tax cut on an inheritance tax, an asset should be worth over US$1.5 million. Very few people inherit assets over this limit. As a result, the inheritance taxation does not affect many people. Further, cousins who are closely related to the donors are not taxed when they inherit assets from the first. The close relations include spouses, parents, grandchildren and children.
The Senate of the USA made an amendment to S.CON.Res 13 in April 2009. According to this resolution, an exemption of $5,000,000 is given if enacted with the FY 2010 budget enforcing the tax rate as 35 percent maximum.
As the limits of inheritance tax have vast differences in accordance with the value and type of the assets inherited, people seek assistance from tax professional companies to clarify the situation. Some insurance companies have chains of branches assisting people to avoid tax cuts. In addition a great deal of law firms is also in the trade providing consultations and legal advice to people who inherit others' fortune to avoid inheritance tax within the legal framework.
Creating a trust is one way to avoid limit for inheritance tax. Others combine tax limits to married couple. The limitations have been put to get money from large estates to facilitate poor people. Although there are many ways and many consultants to pass over inheritance tax limits, the value of these laws is limitless to fair governance of a state.