We live in Illinois and I would like to know if we have to pay any taxes on it?

Thanks
Randy

Your wife does not owe any taxes - there is no federal inheritance tax and no IL inheritance tax. And since your MIL died in calendar 2010 there is no eastate tax to worry about either, as both the federal and IL estate taxes have been effectively repealed for calendar year 2010. (Note - even if the estate tax was still in force it would have beem your mother-in-law's estate that would be responsible for paying any estate taxes due, not your wife, since estate taxes are not the responsibility of heirs. But all this is moot for 2010.) If your MIL lived in a state other than IL, it's possible that here may be an estate and/or inheritance tax imposed by that state - please clarify what state she lived in and we'll check for you.

She also lived in Illinois. Thanks for your help.

Even if the estate taxes were in force, $450K is well under the exemption amount.

QUOTE," She left $450K to my wife. . . I would like to know if we have to pay any taxes on it?"--Federal estate tax exemption , credit equivalent, increased on Jan 1 2009 from $2 million per person to $3.5 million. This means your MIL may transfer at death up to $3.5 million of assets without the imposition of a federal estate tax.

Quote:

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Originally Posted by wnhough

QUOTE," She left $450K to my wife. . . I would like to know if we have to pay any taxes on it?"--Federal estate tax exemption , credit equivalent, increased on Jan 1 2009 from $2 million per person to $3.5 million. This means your MIL may transfer at death up to $3.5 million of assets without the imposition of a federal estate tax.

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Wnhough - as of Jan 1 2010 the federal estate tax is temporarily repealed, for all who die in 2010. So for anyone passing this year it doesn't matter how much the estate is worth - no federal estate taxes are due. Of course, Congress could always change its collective mind and reinstate estate taxes retroactive for those who have died already in 2010, but it doesn't seem very likely.

Right!