What Taxes Apply to My Inheritance, and When Will I Receive It?

5 states charge a state inheritance tax: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. The rate and exemption depend on the beneficiary's relationship to the deceased — spouses are typically exempt, children and parents usually face lower rates or large exemptions, and distant relatives or unrelated heirs pay the highest rates. The remaining states have no inheritance tax at all. See state-by-state rates with our Estate & Inheritance Tax Calculator.

Estate tax is paid by the estate before assets are distributed — the executor files the return and pays out of estate funds. Inheritance tax is paid by the beneficiary after receiving the inheritance. The federal government charges an estate tax on estates above the federal exemption. Some states charge a state estate tax, a smaller group charges an inheritance tax on the beneficiary, and at least one state (Maryland) charges both.

No. The IRS does not treat inherited money, real estate, or personal items as income, so you don't report them on your federal return when received. Two exceptions: inherited retirement accounts (401k, traditional IRA) are taxable as ordinary income when distributed, and any investment earnings after the date of death are taxable. For inherited property, capital gains use a stepped-up cost basis — the date-of-death value, not what the deceased originally paid.

The timeline varies based on the estate plan and assets involved. Assets that bypass probate — life insurance and retirement accounts with named beneficiaries — typically arrive in 2-8 weeks. Trust distributions take 1-6 months. Probate estates usually take 6-18 months, sometimes longer for complex estates or contested wills.

When someone dies without a will (intestate), their assets go through probate and are distributed according to state law. The court appoints an administrator to handle the estate. This process typically takes longer and costs more than when there is a valid will. Use our Who Inherits Calculator to see how your state distributes assets without a will.

Trusts generally allow faster distribution because they avoid probate court. The trustee can distribute assets after notifying beneficiaries and handling creditor claims, without court approval. Wills must go through probate, where a judge oversees the process. This adds time, cost, and public disclosure. See our Trust vs. Will comparison for a detailed breakdown. To give your own heirs that same faster experience, SimplyTrust builds a revocable trust online.

Sometimes. Executors and trustees may make partial distributions once they are confident there are sufficient assets to pay all debts, taxes, and expenses. They must be cautious — if they distribute too much too early, they could be personally liable for unpaid claims.