What Fort Mill Residents Need to Know About Inheritance and Estate Taxes

When a loved one passes away, navigating the legal and financial aftermath can be overwhelming. Among the most confusing topics? Inheritance and estate taxes. If you're a South Carolina resident looking for guidance, a reputable Fort Mill tax consulting firm can help you make sense of the details and plan accordingly.

In this post, we’ll break down the basics of inheritance and estate taxes, explain who pays what, and offer some practical tips to help you prepare and protect your legacy.

Inheritance Tax vs. Estate Tax: What’s the Difference?

Though the terms are often used interchangeably, inheritance tax and estate tax are two very different things.

• Estate tax is a tax on the total value of a deceased person’s estate before it's distributed to beneficiaries.
• Inheritance tax, on the other hand, is paid by the beneficiaries after they receive their share.

Here’s the good news for South Carolina residents: the state does not impose either an inheritance tax or an estate tax. However, federal estate tax still applies in certain cases, and if you inherit property from someone who lived in a state that does collect inheritance tax, you could still be on the hook.

Federal Estate Tax Thresholds

Most families won’t have to pay federal estate tax, but it’s still important to understand the limits. As of 2025, the federal estate tax exemption is $13.61 million per individual. This means:

• If someone dies with a total estate value under $13.61 million, there is no federal estate tax.
• Estates exceeding this amount are taxed at rates up to 40% on the amount over the threshold.

For married couples, unused exemption amounts can be transferred, doubling the tax-free amount to over $27 million—a significant planning opportunity for high-net-worth families.

Who Might Still Owe Inheritance Tax?

Although South Carolina doesn’t impose one, six states still do: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. If you inherit assets from someone who lived in one of those states, you may owe inheritance tax even if you live elsewhere.

The rate you pay—and whether you pay at all—often depends on your relationship to the deceased. For example:

• Spouses are typically exempt.
• Children and grandchildren may pay lower rates.
• Distant relatives or unrelated beneficiaries often pay the highest rates.

Estate Planning Tools to Reduce Taxes

Whether you're concerned about federal estate tax or just want to ensure a smooth transfer of wealth, there are strategies you can use now to reduce future tax burdens:

• Lifetime gifting: You can give up to $18,000 per person annually (2025 limit) without triggering gift tax.
• Irrevocable trusts: These can remove assets from your taxable estate while giving you control over distribution.
• Charitable donations: Giving to qualified charities can reduce the size of your estate and your taxable income.

Working with professionals like Carolina Tax Consulting can help you evaluate your assets, understand your potential exposure, and implement these strategies effectively. Their Fort Mill services include estate tax planning, wealth transfer strategies, and personalized financial guidance.

Case Study: Minimizing Federal Estate Tax

When David, a retired business owner in Fort Mill, realized his estate was nearing the federal tax threshold, he worked with Carolina Tax Consulting to create a plan. Over five years, he:

• Gifted shares of his company to his children annually
• Created a charitable remainder trust to support his favorite nonprofit
• Updated his will and beneficiary designations

The result? He reduced the size of his taxable estate by over $4 million, ensuring his family received more and paid less in taxes.

Final Thoughts

Understanding inheritance and estate taxes doesn’t have to be a guessing game. Whether you’re planning your own estate or managing an inheritance, knowledge and preparation are key.

If you’re ready to get expert help tailored to your situation, connect with a trusted tax professional today. With the right plan in place, you can protect your legacy—and your loved ones—from unnecessary tax burdens.

Want to secure your financial legacy? Schedule a consultation with Carolina Tax Consulting and take the first step toward smarter estate planning.