Nebraska Inheritance Tax Overview

NE INHERITANCE TAX: Neb. Rev. Stat. § 77-2003 provides: “all  heirs,  legatees,  and  devisees,  personal  representatives,  other  recipients  of  property subject to tax, and trustees shall be liable for the Nebraska Inheritance Tax.”  Whether real or personal and whether tangible or intangible, all property is subject to NE inheritance tax if the decedent at the time of death was a resident of NE; not just the probate estate, but on the augmented estate of the decedent, including joint tenancy or transfer on death, and even life insurance payable to an estate.  Even gifts made within the three years before death are deemed to have been made in “contemplation of death” and nonresidents’ real and tangible personal property located in NE are included.

Valuation is from the date of death and includes accrued but unpaid property, like dividends, interest, & rents.  Partial interests, such as life estates, remainder interests, and lease terms are included, with value calculated by Treas. Reg. § 20.2031-7(d) using 7520 rates.

Beneficiaries are entitled to deductions for all costs of administration (both fees for professional services and costs of sale of assets), funeral costs, the expenses of the last illness (within 6 months of death), debts for which the decedent was liable that were paid, and any federal estate tax or state inheritance tax applicable.  Additional allowances exist for Homestead ($20,000 for surviving spouses; minor children), Exempt Property ($12,500 for surviving spouse and any children – need not be minors), and Maintenance Allowance ($20,000 for surviving spouse and minor children supported by the decedent).  Deductions are allocated to the property bearing the tax expense.  Credit is provided if the property had resulted in any inheritance tax paid in the 5 years before the decedent’s death.
 
The NE inheritance tax rate and exemption amounts are then tied to the classification of the person receiving such property. The rates for deaths in 2023 are:
 Spouse, Beneficiaries Under 22 Years, and Charities: Exempt
 Siblings, Descendents, and Ancestor: 1% after $100,000
 Aunts, Uncles, Nieces, and Nephews: 11% after $40,000
 All others:  15% after $25,000
 
The tax payment has to be completed within a year of the date of death to avoid interest and penalties.  Interest accrues at 14 percent and the failure to file a penalty of 5 percent per month, up to 25 percent of the tax owed.  The inheritance tax is also a lien on the real property subject to tax until paid or terminated.
 
No hearing to determine the tax is necessary if the county attorney(s) in the county(ies) where the assets are present and other parties responsible for tax waive the hearing and a party to the proceeding (PR or Trustee) agrees to pay the tax; however, DHHS must be given notice when no probate proceeding occurs.