Tools for Heirs and Beneficiaries in Kentucky

Kentucky levies an inheritance tax, paid by the beneficiary at a rate set by relationship, and no estate tax; the federal estate tax applies above $15,000,000.

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6 tools for Kentucky

Who Inherits Without a Will?

Without a will in Kentucky, a surviving spouse takes the entire estate when every child of either spouse is a child of both, and descendants divide what passes to them per stirpes.

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How Much Are Estate & Inheritance Taxes?

Kentucky levies an inheritance tax, paid by the beneficiary at a rate set by relationship, and no estate tax; the federal estate tax applies above $15,000,000.

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What Taxes Apply to My Inheritance?

In Kentucky, an inheritance is subject to a state inheritance tax at a rate set by the beneficiary's relationship; probate assets arrive when the estate closes, 6 months to 12 months for a simple estate.

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How Does Step-Up in Basis Work?

Inherited assets in Kentucky take a basis reset to fair market value on the date of death, and the gain on a later sale faces ordinary income tax at the state's regular rates.

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When Do I Have to Withdraw an Inherited IRA?

See which federal withdrawal rules apply to an inherited IRA, Roth IRA, or employer plan, the deadline year, and the missed-withdrawal tax.

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Do I Have to File Tax Returns for Someone Who Died?

Kentucky requires a final state income tax return for the decedent alongside the federal Form 1040; a federal estate tax return (Form 706) is required only for estates above $15,000,000.

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Yes. Kentucky imposes an inheritance tax, paid by the beneficiary rather than the estate, at a rate set by the relationship to the decedent. Kentucky has no separate state estate tax.

Kentucky groups beneficiaries into classes by their relationship to the decedent, each with its own exemption and rate. Fully exempt: surviving spouse, parent, child by blood, stepchild, child adopted during infancy, child adopted during adulthood reared by the decedent during infancy, grandchild (issue of any of those child types), nephew or niece (including of the half blood), brother or sister (including of the half blood), charitable, religious, and educational institutions, and kentucky cities/towns/public institutions. The rate climbs with distance from the decedent, up to 16% for an unrelated beneficiary. The return is due 24 months after death. The Kentucky inheritance tax guide walks through the classes.

No. The IRS does not treat inherited money, real estate or personal items as income, so a beneficiary in Kentucky does not report them on a federal return when received. Two exceptions: an inherited retirement account (a 401(k) or a traditional IRA) is taxed as ordinary income as it is withdrawn, and earnings after the date of death are taxable. Inherited property takes a stepped-up basis, its value on the date of death, for any later capital gain.

When someone dies, the cost basis of the property they leave is reset to its fair market value on the date of death under IRC § 1014. A later sale is taxed on the gain above that stepped-up basis, not above what the original owner paid, so the appreciation of the owner's lifetime is never taxed. The rule is federal and applies in Kentucky as in every state.

Kentucky intestacy law decides. Kentucky follows separate property rules: the surviving spouse's share depends on whether children survive and whose children they are. The estate passes to the closest surviving relatives, in most cases the spouse and children first, then in order: Parents; Brothers and sisters and their descendants; Grandparents; Uncles and aunts and their descendants; Stepchildren; The state (escheat).

Tools for Heirs and Beneficiaries in Kentucky

Estate taxes are paid by the estate before anything is distributed; inheritance taxes are paid by the person who receives the property. In 2026 the federal estate tax reaches only estates above $15 million per person, and there is no federal inheritance tax. 12 states plus the District of Columbia levy their own estate tax at lower thresholds, and 5 states levy an inheritance tax whose rate depends on the beneficiary's relationship to the person who died.

Beneficiaries in Kentucky pay the inheritance tax themselves, at a rate set by their relationship to the person who died; inherited assets take a basis reset to fair market value on the date of death, and the gain on a later sale faces ordinary income tax at the state's regular rates. Probate assets arrive when the estate closes: a simple estate closes in 6 months to 12 months.

SimplyTrust Editorial·Updated September 15, 2026

Legal Sources

Data sourced from Kentucky statutes and official state code. How we research.