You should be aware though, that there are circumstances under which you might end up paying tax. For example, sometimes a will states that each individual beneficiary must pay any tax arising from the transfer of an asset from the deceased person to the beneficiary. This is rare, but these clauses are sometimes used when a testator is trying to equalize a distribution or control the amount of taxes that will be levied against the estate.
There is also the matter of the increase in value of an asset from the time the testator dies to the date the beneficiary takes possession of it. The increase in value of the asset during that time may be taxed to the beneficiary.
It could also be the case that you may receive an asset from an estate without paying any tax, but when you sell or dispose of the asset, you have to pay tax on the increase in value. This would be the case, for example, with a house or cottage that is not your principal residence.
Even if you normally do your own taxes, it would be worthwhile to consult an accountant in the year that you inherit a significant amount from an estate. Tax rules are complex, and general information can never replace a one-on-one discussion where you get a chance to explain the details of your specific situation.
Hello,
ReplyDeleteMy father has told me I am to receive 25% of his estate when he dies. (my brother is to receive 25% and his wife 50%)His wife is the executor of his will and very hostile to us, his children. How do we ensure that she properly provided us with our inheritance? Should we hire a lawyer to ensure it is done legally and that the 25% is honored, or is this necessary?
If the executor is hostile to you, you are in for a world of trouble. Tell your dad to appoint an independent executor (his lawyer or accountant), or to also put you as an executor.
ReplyDeleteOtherwise, you could easily lose it all and be forced to spend thousands of dollars and years of litigation to (maybe) get anything back.