Two Rivers, WI asked in Estate Planning for Wisconsin

Q: Is an inheritence of home sales funds, annuity or trust funds taxable?

The inheritence will come from Illinois and we live in WI

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1 Lawyer Answer
Daniel J. Krause
Daniel J. Krause
  • Estate Planning Lawyer
  • Madison, WI
  • Licensed in Wisconsin

A: The answer to this question depends on a few things: 1-the size of the entire estate, including life insurance, IRAs, real estate, etc. If the estate was large enough to have an estate tax, then the tax will have to be paid before you get the property. 2- what year did the decedent die? This is important because the estate tax exemption amounts changed every year in the last few years. If the decedent died in 2011, no federal estate tax is applied to estates under $5mill. 2010 is different and also complicated, and 2009 the relevant number was $3mill. 3- What type of trust, and who funded it and maybe how much trust assets appreciated since their purchase. If the trust was an irrevocable trust funded by gift, there may be no estate tax, but could be capital gains tax. 4- Illinois tax law. I am a Wisconsin attorney and am not up on Illinois estate/inheritance tax law. Currently Wisconsin has no estate tax, but Illinois may be different. If the assets are in Illinois, their law will control.

In general, there is no income tax on inheritance, and estate tax only kicks in once an estate is a certain size. In specifics, your particular situation would need to be looked at closer to answer in more detail.

-Dan Krause-


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