How is an inheritance paid--check for the entire amount?

Question

How is an inheritance paid--check for the entire amount?

Answer 1

It depends.

If the estate can be wrapped up quickly, generally 1 check.

If the estate drags on, generally 1 check per year.  If the estate has income, you generally want there to be a distribution so that the income and the income tax obligation are distributed as well.  The tax rate on income to an individual is generally lower than the same income if the estate pays the tax.

The executor can also hold out money for contingencies and release that later.

Answer 2

I agree with the answer above, in part, because it depends if stock or property have to be sold, whether there are estate taxes due, and whether creditors have to be paid (there are usually a few, utilities and the like).

  However I must stress to you that you will NOT owe any income tax on your inheritance unless you live in a state that has an inheritance tax.  There is no Federal Inheritance Tax although there is Federal Estate tax which is paid before the estate is disbursed. (The estate must be larger than $2 million this year and $3.5 million in 2009 and the Estate pay the tax NOT the beneficiary). The states with Inheritance Taxes are:

Nebraska

Missouri

New Jersey

Pennsylvania

Tennessee

Virginia

Washington

West Virgina

Wisconsin

Wyoming