Judy has $3 million cash. Her husband is deceased. If Judy dies today, how many kinds of taxes will her only child have to pay? Will there be estate taxes, inheritance taxes(?), income taxes? Other taxes?
I find lots of discussion on the web about estate taxes. Are those the only taxes owed when someone dies and passes their stuff to their heirs? I understand there is a $2 million "exclusion" at present. I presume that means Judy's estate will pay taxes on just $1 million ($3 million - $2 million)? Will Judy's daughter also have to pay income taxes on the stuff she inherits? If so, what amount will she pay taxes on? The full $3 million, or the part left over after estate taxes are paid? I can't find a source that explains ALL the tax ramifications.
What's the deal with the $12,000 annual gift allowance? Does the person recieving the gift have to pay any taxes at all? Is this different from the $2 million exclusion?
I find lots of discussion on the web about estate taxes. Are those the only taxes owed when someone dies and passes their stuff to their heirs? I understand there is a $2 million "exclusion" at present. I presume that means Judy's estate will pay taxes on just $1 million ($3 million - $2 million)? Will Judy's daughter also have to pay income taxes on the stuff she inherits? If so, what amount will she pay taxes on? The full $3 million, or the part left over after estate taxes are paid? I can't find a source that explains ALL the tax ramifications.
What's the deal with the $12,000 annual gift allowance? Does the person recieving the gift have to pay any taxes at all? Is this different from the $2 million exclusion?