Nebraska Inheritance Tax Law

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There's only one way to ensure that your assets will go to the loved ones or charity you want to receive them after your death. That is by writing a last will and testament clearly stating the heirs and beneficiaries. Those dying intestate, or without a will, have assets divided according to the inheritance law of their particular state. Unlike some other states, Nebraska also charges inheritance tax on life insurance proceeds.

Administration

  • In Nebraska, the inheritance tax is administered by the court of the county in which the decedent resided, or in the case of nonresident decedents, the county in which the person owned real estate or tangible personal property. Taxes are based on the real or tangible personal property's fair market value and apply to property bequeathed in the decedent's last will and testament or property divided among heirs according to intestacy laws. These taxes go into a general county fund or entity selected by the county's governing body.

Exemptions

  • At the time of publication, Nebraska allows a homestead exemption of $7,500 to those inheriting the decedent's primary Nebraska residence. The first $10,000 of property or asset value left to any immediate relative is exempt from inheritance tax. The first $2,000 of property or asset value left to distant relatives is exempt. The first $500 of property or asset value left to a nonrelative is exempt. Bequests made to nonprofit 501(c) organizations, religious institutions and scientific or educational entities are exempt from any state inheritance tax.

Inheritance Tax Rates

  • Spouses in Nebraska are exempt from paying inheritance taxes. Immediate relatives, such as parents, children and grandchildren, pay a 1 percent tax on any amount of inheritance over $10,000. Remote relatives, including siblings and nieces and nephews, pay a 6 percent tax on amounts between $2,000 and $60,000 and 9 percent on any amount over $60,000. Nonrelatives pay 6 percent on amounts between $500 and $5,000, 9 percent up to $10,000, 12 percent up to $20,000, 15 percent up to $50,000 and 18 percent on any amount greater than that.

Deductions

  • Although Nebraska does not have an estate tax and all taxes are borne by heirs or beneficiaries, the state does allow deductions for certain items from any property or assets subject to tax. These include all funeral and burial expenses for the decedent, administration expenses such as legal fees or court costs, any medical expenses of the decedent up to six months prior to her demise and any of the decedent's debts paid by the estate.

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