Will My Children Have to Pay an Inheritance Tax in Missouri on My Home in the Event of My Death?

When Missouri assessed inheritance taxes, each individual beneficiary was required to pay individual inheritance taxes. If you left multiple children a single piece of property, each child would have been required to pay tax separately. Luckily for you, Missouri no longer assesses this tax. However, your children may have other tax liabilities.

Missouri Inheritance Tax

As of the publication date, the state of Missouri does not currently have an inheritance tax in place for your children, or for anyone else to whom you will your estate when you die. Additionally, although the federal government has an estate tax, no inheritance tax is currently assessed at the federal level. The responsibility for estate taxes lies with the executor of the estate, and only becomes a problem for the beneficiaries of a will if it is not paid by the executor.

History

Prior to 1980, Missouri imposed an inheritance tax on any and all beneficiaries of a deceased person who had lived in Missouri. From 1980 forward, Missouri has not had an inheritance tax, partially due to the fact that in 1980, the state began imposing estate taxes instead. Missouri also offered exemptions for part of the tax to certain family members, including children. If you had left your children your house prior to 1980, they would have each had a $5,000 exemption applied to their inheritance taxes. If your children had physical or mental disabilities, their exemptions would have been $15,000 each.

Considerations

Until 2005, the U.S. federal government offered a tax credit that refunded a portion of estate tax money as reported on a federal estate tax return. Missouri’s estate tax was calculated as whatever the credit amount from the federal return was. For this reason, Missouri’s estate tax was nicknamed “the pickup tax,” because it picked up what the federal government left behind.

2011 Estate Tax

While your children won’t have to pay an inheritance tax if you leave your house to them, both Missouri and the federal estate taxes have returned, as of 2011. Both types of tax were nonexistent for the calendar year 2010. From Jan. 1, 2011, forward, unless the law changes, your estate will be required to file both federal and state estate tax returns before your children can claim any property you leave them. While your decedents are technically not paying taxes, you may consider it so, since those taxes are paid from the estate that you’re leaving to them.