Instead of money, it’s probably better to pass on heirlooms or genetic traits from generation to generation, because at least the government can’t take a part of that.
NerdWallet listed the 14 state that have an estate tax, and the six states that have an inheritance tax. Estate taxes, which are also applicable in Washington D.C., have exclusion amounts between $1 million and $5.49 million and top tax rates of of to 20 percent, depending on the state. In addition, the federal estate tax applies to people with assets in excess of $5.49 million.
The inheritance tax applies to those who receive an inheritance from the deceased person. Tax rates differ depending on relationship, where spouses are often exempt, children are taxed at a low rate, and distant relatives or family friends are taxed at a higher rate. Nebraska has the highest inheritance top tax rate, at 18 percent.
The best ways to get around these taxes are to spend while you’re alive, either on yourself or on others.
Depending on your state’s tax laws, you could give away part of your estate as gifts to loved ones while you’re still around. Most states don’t tax gifts.
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