Are beneficiaries obligated to pay taxes?

When a person creates their will, they generally pick a handful of loved ones to leave some of their assets to. In order to make this decision bound by law, they will outline who will inherit which assets in a will. The people who receive a decedent’s assets upon their death are known as beneficiaries. It is important to note that in California, beneficiaries are not subject to pay an inheritance tax.

However, beneficiaries should be aware that they may be subject to certain tax obligations related to receiving a trust or an estate. These may include income taxes, real property taxes, taxes that skip a generation, and estate taxes. It is also important to be aware that if the beneficiary lives outside of the state of California but the decedent lived in California, the beneficiary may be subject to inheritance taxes in their state of residence.

In California, the Internal Revenue Service and Franchise Tax Board should be notified of the person’s death. If the deceased person has any outstanding tax obligations, it is important that they are all paid off and all debts are resolved before beneficiaries can collect any inheritance. If you have any questions about being named as a beneficiary in the state of California, it is important that you consult with an attorney who is very experienced in this field.

If you need dedicated legal representation for wills, trusts, and estate matters in California, contact the Law Offices of Yacoba Ann Feldman to schedule a consultation.