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CGCPA
CGCPA, CPA
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Experience:  over 40 years experience in tax matters
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My father died recently. He had a non-retirement mutual fund

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My father died recently. He had a non-retirement mutual fund that he intended for out inheritance. This money needs to be dispersed between the siblings at this time. The siblings live in Mississippi, Alabama and Tennessee. Will we need to pay taxes on the inheritance, and if so, can you please give an approximate amount that we should withhold for this purpose. Thank you.
Submitted: 3 years ago.
Category: Tax
Expert:  CGCPA replied 3 years ago.

There is no estate tax on an estate below $1,000,000. so, unless the estate he left is over that amount you will not need to be concerned there. As to you and your siblings, there is inheritance tax so, for your side of this, there are no concerns about taxes.

 

The reason originally used to generate the estate tax was not to hurt normal people and/or their children but to redistribute wealth and prevent a small group from becoming excessively powerful. Personally I think this has been perverted a bit but I cannot change that.

Customer: replied 3 years ago.
I don't understand when you say "estate tax." Is that the same as money intended as inheritance money? When I think of "estate," I picture land or house. He left nothing like that. He was 82 and lived with my sister. He sold his property long ago. The total amount of the fund was around 133,000.00, which must be split between 5 children. The lady at the Hartford just said it was a non-retirement mutual fund, that' all I know. My dad listed myself and an older sister as beneficiaries. She and I do not want to be left "holding the bag" come tax time, which is why I need to have some amount to withhold before dispensing this money to all the siblings. We will need to withhold the tax amount now so to be available when tax time rolls around. As far as the government is concerned, they just see it as a non-retirement mutual fund, and not as inheritance. Thank you again. Kim
Expert:  CGCPA replied 3 years ago.

Estate is a legal term referring to the assets and obligations left behind when someone passes away. Inheritance refers to the distribution of the assets, after debts, of that same person. The estate tax is levied on the assets less debts (net assets) of the deceased. There are no taxes levied on the distribution of those net assets (inheritance).

 

If all you father's net assets totaled $133,000 there will be no taxes to be paid and you can feel free to distribute the money. Since it was invested in a non retirement account it cannot include an IRA or any other form of retirement funds subject to taxes. You need not be worried there.

CGCPA, CPA
Category: Tax
Satisfied Customers: 3738
Experience: over 40 years experience in tax matters
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