For decedents dying after December 31, 2012, their estates will no longer be required to pay the Indiana Inheritance Tax that was previously imposed in Indiana on transfers of wealth at death.
As part of a tax relief package signed into law on May 8, 2013, by Governor Mike Pence, the Indiana Inheritance Tax has been repealed with a retroactive effective date of January 1, 2013. Consequently, there are no longer any Indiana state death taxes imposed on decedents who were either residents of Indiana at the time of their death or who had property located in the state.
The Indiana Inheritance Tax was a fairly robust tax with rates ranging from 1% to 20% of the net taxable value transferred, depending on a beneficiary’s relationship to the decedent.
Aside from the significant tax savings that may result for a decedent's estate, the administration of a decedent's property in Indiana should now become more streamlined as there is no longer a need to prepare an Indiana Inheritance Tax Return, which was a fairly significant part of many estate administrations. As a result, in addition to the savings of the Indiana Inheritance Tax, the substantial reduction in cost of an estate's administration could result in even more savings for a decedent’s beneficiaries.
Bottom line: For many estates, more assets will be available to an individual's chosen beneficiaries. This result, coupled with the increase in the federal estate tax exemption (currently $5,250,000.00, subject to inflation adjustments), should provide many Hoosiers with substantial savings from the imposition of any death taxes and reduce the timeline and cost of administration of their estates.