 WICHITA, KANSAS Kansas Inheritance Tax Replaced by Estate Tax As part of the Kansas Tax Reduction and Reform Act of 1998, the Kansas Legislature also repealed the Kansas Inheritance Tax and replaced it with an estate tax. The Kansas Estate Tax Act applies to estates of decedents dying after June 30, 1998. The Kansas estate tax is a "pick up" tax equal in amount to credit for state death taxes allowed by Internal Revenue Code § 2011 for federal estate tax purposes. If an estate has property both within and outside of Kansas, the Kansas estate tax is the fraction of the allowed federal § 2011 credit that the value of the Kansas gross estate bears to the value of the total federal gross estate. Estates which are not subject to the federal estate tax (estates with a gross estate value of less than $625,000 for 1998) will not be subject to the Kansas estate tax. Thus, the Kansas estate tax ends state taxation of estates which do not pay federal estate tax. The legislature estimated that approximately 80% of all Kansas estates would fall in this category. Estates subject to the Kansas estate tax must file a Kansas Estate Tax Return on new Form K-706. The deadline for filing the Kansas Estate Tax Return and paying the tax is the date nine months after the decedent's date of death. Under the prior inheritance tax law, Kansas computed both the pick up tax and an inheritance tax and assessed whichever tax liability was greater. The inheritance tax totally exempted distributions to surviving spouses, exempted the first $30,000 of distributions to lineal descendants and ancestors of the decedent and exempted the first $5,000 of distributions to the decedent's siblings. The foregoing article has been prepared by Bever Dye, LC, as a service to our clients for informational purposes only and does not constitute legal advice. It is designed to provide general information concerning recent developments and topics of interest in the areas of tax and estate planning law. Do not take action in reliance on items contained in this article without obtaining the advice of an attorney. |