Inheritance tax (or estate tax) is generally due within nine months of the date of death in many US jurisdictions (e.g., Pennsylvania, PA Inheritance Tax Guide). For UK residents, Inheritance Tax (IHT) is typically due within six months. Interest and penalties often accrue if payment is made after this deadline.
Federal and state estate taxes are paid from the assets of your estate before the remaining assets can be distributed to your heirs.
This means that if you inherit a property any time between 1st September and 31st August, you must pay Inheritance or Capital Acquisitions Tax by the 31st October. For example, if you inherited a property on 3rd September 2023, you would have had to pay CAT by 31st October 2024.
The time it takes to receive inheritance money varies widely depending on the estate. Simple estates may be completed within six months, while more complex estates can take a year or longer. Probate, tax requirements, property sales, international assets and disputes all influence the length of the administration.
The 7 year rule
No tax is due on any gifts you give if you live for 7 years after giving them - unless the gift is part of a trust. This is known as the 7 year rule.
In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024. Estate taxes are based on the size of the estate. It's a progressive tax, just like the federal income tax system. This means that the larger the estate, the higher the tax rate it is subject to.
Paying Inheritance Tax should be completed by the end of the sixth month after the deceased has passed. If this is not done, HMRC will begin charging interest on the amount due. If there are assets which may take longer to sell, such as property, payments can be made in instalments over a period of 10 years.
You can expect to receive inheritance money anywhere from a few months to over a year, with simple estates often settling in 6-12 months, while complex ones with taxes, disputes, or many assets might take years, depending heavily on probate/trust administration, asset types, and creditor claims. After the court grants probate (if needed), final distribution often takes another 3-6 months, but this varies greatly.
Most estates are finalised within 9 to 12 months, and it may take longer if: there are complex issues. the Will is contested.
If the estate earned income (such as dividends or rental income) after the person's death, a trust is created, and the trustee of the trust (usually the legal personal representative) is required to pay any tax on the net income of the deceased estate.
In general, any inheritance you receive does not need to be reported to the IRS. You typically don't need to report inheritance money to the IRS because inheritances aren't considered taxable income by the federal government. That said, earnings made off of the inheritance may need to be reported.
Consequences of Late Payment
Failing to pay Inheritance Tax on time can result in significant penalties. HMRC charges interest on the outstanding tax amount, which can quickly accumulate and increase the overall financial burden on the estate.
You can typically inherit a very large amount from your parents without paying federal tax, as the federal estate tax exemption is around $15 million per person for 2026, meaning only estates larger than that pay tax, not you directly. While you generally don't pay income tax on inheritances (except for pre-tax retirement funds like IRAs/401(k)s, which are taxed as income when withdrawn), some states have their own estate or inheritance taxes with much lower thresholds, affecting a smaller portion of wealth.
Give more money away
Lifetime gifting is a straightforward way to begin reducing your IHT bill. By gifting money during lifetime, that would have been part of an inheritance anyway, you reduce the size of your estate so that there is smaller amount subject to IHT on your death.
Charity exemption
Like the spousal exemption, assets passing to charity on death are exempt from inheritance tax. As such, if an entire estate passes to charity, there will be no inheritance tax due.
By waiting ten months, the executor has the chance to see whether anyone is going to raise an objection. There are six months from the date of the Grant of Probate in which to commence a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Then a further four months in which to serve the claim.
Children generally inherit significant amounts tax-free due to the high federal estate tax exemption, which is $13.99 million per individual for 2025, with a planned reversion to a lower amount ($5 million adjusted for inflation) in 2026, meaning very large estates are taxed, but most inheritances fall below this threshold, though some states have their own inheritance taxes. Heirs also benefit from the "step-up in basis," which lowers capital gains tax on inherited assets like stocks and real estate.
Generally, receiving an inheritance (cash, property, investments) isn't taxable income for the recipient at the federal level in the U.S., but you pay taxes on any income the inheritance generates after you receive it (like interest or dividends), and some states have their own estate or inheritance taxes. The biggest exception is inheriting pre-tax retirement accounts (like traditional IRAs or 401(k)s), where distributions are taxed as ordinary income for the beneficiary.
In most cases, when IHT is payable depends on the type of assets within the estate and how they are being transferred. Generally, the tax must be settled within six months from the end of the month in which the individual passed away (HMRC guidance).
No, California does not impose an inheritance tax. If you inherit money, you will not have to pay a tax on the amount you inherited. The money you inherited will not be considered income.