Kentucky charges an inheritance tax for some types of beneficiaries. It divides the types of beneficiaries into three categories: Class A, Class B and Class C.
Class A
The decedent’s spouse, children, grandchildren, parents and siblings fall under Class A. They don’t have to pay inheritance taxes.
Class B
Great grandchildren, aunts, uncles, nieces and nephews are Class B beneficiaries who have to pay inheritance tax on any inheritance over $1,000. Their tax rate ranges from 4% to 16%.
Class C
Those who don’t fit in Class A or Class B are Class C beneficiaries. This can include organizations, friends and cousins. Class C beneficiaries are exempt up to $500 and have a tax rate of 6–16%.
Discount
You could get a 5% discount on the inheritance tax that you owe by paying it within the first nine months of the decedent’s death. Kentucky’s probate law requires that you pay the inheritance tax within 18 months of the testator’s death. You could request an installment plan to make it more manageable for you to pay the tax. Late fees apply if you don’t file within the required time frame.
Intestate succession
When a person dies without a valid will, the state has to divide their estate based on intestate succession law. A surviving spouse receives everything if there are no surviving children, parents or siblings. If there are children but no spouse, then the children receive everything. Half of the personal property and half of the real property go to the surviving spouse, and the remaining property is for the children when both the spouse and children survive.
An exception to these rules is if your spouse cheated on you and left you. They wouldn’t have any claim to your estate. If you reconciled and continued living together after the incident, then the exception won’t apply.
You may want to have a full understanding of Kentucky’s inheritance laws before writing your estate plan to understand the impact of your property division. Ensuring that your will is valid helps prevent an intestate succession situation as well.