When you receive an inheritance from a loved one or relative, there is a possibility that you may need to pay an inheritance tax. This tax only occurs in some states, but there may be ways you can avoid the inheritance tax. The federal government does not impose a tax on inheritances.
It may be necessary for the Executor of the estate to pay estate taxes before distributing any of the assets to the heirs. The federal government charges an estate tax, and some states also do. These taxes are paid out of the estate before money or assets are given to the beneficiaries.
