Is my estate taxable when I die?

This is a pretty common question. I think there is a lot of misconceptions that an inheritance is taxable. For the most part it is not.

Arizona doesn’t have an inheritance or death tax. There is a federal estate and gift tax but unless your estate exceeds 11 million dollars this tax will not apply to you.

There may be income tax incurred but this typically applies on inherited retirement accounts that are pre-tax and the income tax gets paid because the funds are distributed. This isn’t because it is inherited, it is because the tax never was paid during the decedent’s lifetime so the tax needs to be paid now. There are other limited circumstances where there may be some income tax owed, often this is due to capital gains or income generating investments. The inheritance itself is not however an income taxable event.

If you want to know, please feel free to give our office a call at 480-345-0444.