tax purposes inheritance is not taxable income
in the US
regardless the amount - as a recipient of inheritance you do not need to claim it as income. There is no any amount limit. Please see for reference IRS
publication 525 -
Gifts and inheritances. In most cases, property
you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest
, or rents, that income is taxable to you.
However some states
do have inheritance tax on the state level.
But there are neither inheritance nor estat etaxes in California
On the other hand large estates (above $5M) might be subject to estate tax
- that are paid by the estate - not by beneficiaries
Basic exclusion for 2015 is $5,430,000
The value of the estate after exclusion and some deductions
is subject to estate tax.
- see page 5 Table
A - so rates are from 18% to 40%
To avoid or reduce possible estate taxes - we need to plan so-called spent down estate.
During your lifetime - you may gift up to $14,000 annually to any person and unlimited gift to your spouse (assuming your spouse is an US citizen).
In additional - there is unlimited gifts in the form
of tuition or medical expenses
you pay for someone.
So far if carefully planned - you may avoid estate taxes .
In additional - you may use so-called A-B trust.
See this article about using A-B trust in your situation.
Let me know if you need any help.