Calculate inheritance tax and estate tax obligations for the US and UK. Understand exemptions, thresholds, and plan strategies to minimize tax liability on inherited assets.
Estate & Inheritance Tax Overview
US Federal Estate Tax (2024)
- Exemption: $13.61 million per person ($27.22 million for married couples)
- Rate: 40% on amounts above exemption
- Portability: Unused exemption transfers to surviving spouse
- Step-up Basis: Inherited assets receive stepped-up cost basis
UK Inheritance Tax (2024-25)
- Nil Rate Band: £325,000 (frozen until 2028)
- Residence Band: Additional £175,000 for family home
- Rate: 40% above thresholds (36% if 10%+ to charity)
- Spouse Exemption: Unlimited transfers between spouses
State Estate Taxes (2024)
| State | Exemption | Top Rate | Notes |
|---|---|---|---|
| Connecticut | $12.92 million | 12% | Matches federal exemption |
| Hawaii | $5.49 million | 20% | Lower exemption |
| Massachusetts | $2 million | 16% | Cliff exemption |
| New York | $6.94 million | 16% | Cliff exemption |
| Washington | $2.193 million | 20% | No federal deduction |
Estate Planning Strategies
- Annual Gifting: $18,000 per recipient (2024) removes assets from estate
- Lifetime Exemption: Use $13.61 million exemption during lifetime
- Charitable Remainder Trusts: Provide income while reducing estate
- Grantor Retained Annuity Trusts (GRATs): Transfer appreciation at low cost
- Family Limited Partnerships: Discounted valuations for family transfers
- Life Insurance Trusts: Remove life insurance from taxable estate
Generation-Skipping Transfer Tax
- Rate: 40% flat tax on transfers to grandchildren and beyond
- Exemption: $13.61 million per person (2024)
- Purpose: Prevents skipping a generation to avoid estate tax