Nebraska Inheritance Tax
Although Nebraska no longer has an estate tax, it is one of six states that imposes a separate state inheritance tax. The Nebraska inheritance tax applies to persons who die while residents of the state or, regardless of state of residence, who die owning real property located in Nebraska. The inheritance tax is due and payable within 12 months of the decedent’s date of death, and a penalty is assessed for failure to file timely the appropriate inheritance tax return. Late payment of the tax may also result in a hefty interest obligation. The tax (including interest and penalties) is a lien upon any Nebraska real estate until paid.
The inheritance tax is administered by the county court of the county in which the decedent resided or in which his or her real property is located. Multiple counties will be involved if a person dies owning real estate in more than one county or in a county other than the county of residence.
There is no tax imposed upon property passing to a surviving spouse, to a person under 22 years of age, or upon property passing to an entity organized exclusively for religious, charitable, public, scientific, or educational purposes. Beyond these exempt classes, the inheritance tax favors transfers within a family, as compared to transfers to non-relatives. Both the exempt amount and the rate of inheritance tax varies according to the degree of relationship between the decedent and the beneficiary receiving the inheritance, as follows:
Immediate Relatives – including parents, grandparents, siblings, children (including those legally adopted), other lineal descendants (including those legally adopted), any person to whom the decedent for not less than ten years prior to death stood in the acknowledged relation of a parent, or the spouse or surviving spouse of any such persons. A one percent (1%) tax is imposed upon the value of the gift to members of this class above a $100,000 exempt amount.
More Remote Relatives – including an aunt, uncle, niece, or nephew related to the decedent by blood or legal adoption, or other lineal descendant of the same, or the spouse or surviving spouse of any of such persons. This class receives a $40,000 exemption, and property valued over the exemption is subject to a 11% tax.
Other Transfers – All other beneficiaries receive a $25,000 exemption, and property valued over the exempt amount is subject to an 15% tax.