Inheritance Tax, and How to Avoid it

They say that two things are inevitable in life: deaththere is some truth in the old assertion that inheritance
and taxes. We don't much care for thinking abouttaxes are paid only by the poorly advised.Most
either. Inheritance tax is the one tax we don't pay untilcountries, with the exception of the UK and USA, tax
we are dead, so perhaps understandably it's a subjectthe beneficiaries of a will, rather than the estate itself.
way down our list of priorities. When pressed, mostInternational comparisons are difficult, but the following
people express the hope that their families, rather thandetails are illuminating:
the state, will inherit their wealth when they die.
Western governments vary considerably in the extentIn the USA, a surviving spouse pays nothing. All other
to which they accommodate this basic human desire.bequests above $1.5 US are subject to federal
To a greater or lesser degree, death taxes are nearlytaxation at 45%, with additional local taxes pushing that
everywhere viewed as a legitimate tool for promotingfigure above 50% in many states. When the current
the objective of social equality. Karl Marx, Andrewrepublican administration came into office in January
Carnegie and John Maynard Keynes had this in2001, the lower threshold was only $675,000: it has
common: they all favored high inheritance taxes.more than doubled in just 5 years. The USA now has
However, this view is by no means universal: with athe second-lowest inheritance taxes in the world.In the
little planning and a global perspective, there are stepsUK, a surviving spouse again pays nothing.
that can be taken to avoid the tax altogether. Indeed,