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Hello I was raised by my great aunt and uncle. They had legal custody of me. They never adopted me. Both my aunt and uncle, whom I considered my parents, passed away leaving their estate to me. The attorney for the estate says that I have to pay an inheritance tax since they never legally adopted me. However, I have papers that show my biological parents gave them custody. I lived with them for over 20 years as them being my parents. Do I have to pay that tax?
Asked on November 29, 2016 under Estate Planning, Iowa
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
Yes, if you were not adopted, you have to pay the tax. Your state exempts children, whether adopted or biological, and other lineal descendents (e.g. grandchildren) from its estate tax, but not great neices or nephews, which is what you are. The fact that your great aunt and uncle had legal custody of you is irrelevant for this purpose--the exception is only for adoptation, not custody alone.
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