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How to Avoid Inheritance Tax in Kentucky Give the assets to the beneficiaries as early as possible. This allows the appreciation of the assets to avoid the inheritance tax. Setting up specific types of trusts can allow your assets to be passed on without being subject to the inheritance tax.

The valuable exemption is called ?gifts out of normal expenditure? and can be found in Section 21 of the Inheritance Tax Act 1984. Gifts out or normal expenditure allows taxpayers to give away sums of any size as long as they come under their ?normal expenditure.?

The balance of whatever's left over is split among the decedent's parents, siblings or children (regardless of whether those children are the product of the decedent's marriage with his or her spouse). But if none of those relatives survive the decedent, the entire estate is awarded to the spouse.

Kentucky Form 20A100 "Declaration of Representative" is used for this purpose. IRS Form 2848, "Power of Attorney and Declaration of Representative", is also acceptable for income tax purposes.

Ing to the Internal Revenue Service (IRS), federal estate tax returns are only required for estates with values exceeding $12.06 million in 2022 (rising to $12.92 million in 2023). If the estate passes to the spouse of the deceased person, no estate tax is assessed. 318 Taxes for 2022 are paid in 2023.

Kentucky has no estate tax, making it one of 38 such states. However, your beneficiary could be imposed with an inheritance tax, as discussed below.