Estate and Inheritance tax
Why the "death tax" matters
Twenty-two states have estate taxes, also known as the "death tax." Estate taxes are taken from the taxable  estate of a citizen who has died. In other words, this is a tax on income that has already been taxed. Because of this many Americans are against the death tax.  There is also a federal estate tax. Property, business assets and investments can all be taxed. The executor fills out a single estate tax return and pays the tax; heirs are liable for the tax if it remains unpaid. The federal government imposes an estate tax on all citizens and residents of the United States but no inheritance tax. All estates get a tax deduction for property received by the decedent's husband or wife along with a $5 million standard exemption for all other property. In other words, a lot of Americans do not owe a federal estate tax.
In 2001, President Bush signed a temporary death tax repeal into law as part of the Economic Growth Tax Reduction and Reconciliation Act (H.R. 1836). It set the federal death tax to go from 55 percent to 45 percent in 2009 and was scheduled for repeal in 2010; it is to expire in 2011 and return to the rate of 55 percent. In President Obama's 2009 Fiscal Year budget he proposed to keep the death tax permanently at 45 percent. However, the American Family Business Institute  helped influence the Senate to pass an amendment to lower the tax from 45 percent to 35 percent and raise the exemption from $2 million to $5 million. However, President Obama still wants to keep the tax at 45 percent.
Kentucky has two death taxes. One is the inheritance tax and the other is the estate tax.  The inheritance tax is imposed on the beneficiaries who receive property from the one who died. Each beneficiary must be responsible for paying his or her own taxes because the inheritance tax is calculated differently for each beneficiary. Usually, close relatives of the one who has passed on are taxed at a lower rate than other beneficiaries. Because of the changes in the federal estate tax laws, Kentucky has no estate tax this year and will not until Dec. 31, 2010 unless another law preventing estate taxes passes. Still, the bluegrass state is one of seven states in the Union that has a separate, sneaky inheritance tax imposed on property owners. If a Kentuckian (or non-Kentuckian) is not immediate family and is receiving an inheritance, that person may have to pay up to the government.
Washington state has the highest death tax standing at 19 percent. “Do the Rich Flee from High State Taxes?” a 2004 National Bureau of Economic Research study, found that states can lose up to one out of every three dollars from their estate taxes because “wealthy elderly people change their state of residence to avoid high state taxes.” At the time, states imposed estate tax rates which were one third as high as they currently are. Different families  have been known to avoid the estate tax by selling out; perhaps the most famous case of this is with the Los Angeles Dodgers owners, the O'Malley family.  Such taxes are the reason why successful businesses are often sold "before their time." 
Examples of taxable property
- Real estate
- Bank accounts (even if located outside of Kentucky)
- Certificates of deposit
- Life insurance payable to the insured or to the estate
- Unpaid balance of mortgages/notes
- Household goods
- Automobiles/farm machinery/boats/trailers
- Income tax refunds
- Estate Tax on Wikipedia
- No Death Tax organization
- AFBI and the Death Tax
- A Guide to Kentucky Inheritance and Estate Taxes
- Steinbrenner learns from O'Malley
- O'Malley sells the franchise
- Planning for the future