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Last Modified on Sep 17, 2025
While paying taxes is an important part of maintaining economic and governmental protocol, taxation may feel undesirable at certain times. Paying inheritance tax can leave your loved ones to use a large portion of their inheritance to pay taxes. If you are looking for answers, hiring a tax planning lawyer can help you sort out questions like, “Can I avoid inheritance tax in Tennessee?” and “How can I structure my estate plan to benefit my heirs and benefactors?”
An Overview of Estate Planning, the Probate Process, and Inheritance Tax in Tennessee
Before you ask a lawyer whether or not you can avoid inheritance tax in Tennessee, you may benefit from learning more about how probate and inheritance tax work in the Volunteer State. The estate planning and probate process can be incredibly in-depth and complex, especially with the added stress of inheritance tax.
When you are sorting out a plan for your estate that can help your heirs avoid inheritance tax, crafting and finalizing a will can prove to be incredibly vital. Only 32% of Americans have a will in place, but with the help of a skilled tax planning lawyer, you can accomplish this task, sorting out important details that can set you and your loved ones up for future success.
Having a will in place can also help protect your heirs from unwanted discord. Roughly 35% of adults in the United States have either experienced estate planning-related familial disputes or know someone who has. These unwanted arguments can lead to stalemates and prevent the necessary progress in your probate proceedings, as well as damage your interpersonal relationships.
Can I Avoid Inheritance Tax in Tennessee?
As of 2016, Tennessee law no longer imposes an inheritance tax, so your heirs will not need to pay a state tax on any assets they may receive from your estate. Still, there may be a tax obligation for heirs whose benefactor’s death occurred prior to 2016.
It is important to be aware of the other factors that could influence your case, including:
- Inheritance from out of state: Just because you live in Tennessee does not mean the property you are set to inherit will come from the same state. If you inherit property from someone who was a resident of a different state that still imposes inheritance tax, you may be required to pay that state’s tax. As of 2025, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania still have an inheritance tax.
- Federal estate tax: Tennessee residents with exceptionally large estates may be subject to paying federal estate tax due to the extensive nature of their estates.
- Other taxes on inherited assets: While the inheritance itself is generally not considered taxable income, it is important to note that any income generated from these assets after you inherit them is taxable. One example of this is if you inherit a rental property, the rental income is taxable. You may also owe capital gains tax if you sell an inherited asset for a profit at a later time.
Federal Estate Tax Planning for Large Estates in Tennessee
For most estates, the federal estate tax is not a factor due to Tennessee’s high exemption limit. For those with estates valued over the federal threshold, however, the following strategies may be able to help you reduce potential liability:
- Make annual tax-free gifts, such as:
- Gift splitting,
- Annual exclusion
- Unlimited gift
- Establish irrevocable trusts: Irrevocable trusts allow you to move assets out of your name and into the ownership of the trust. This allows these assets not to be included in your estate when you pass away.
- Utilize the unlimited marital deduction: If you are a married U.S. citizen, your entire estate can be left to your surviving spouse, and they do not have to pay an inheritance tax. This required estate tax is then deferred until the surviving spouse passes away.
Why Should I Hire a Tax Planning Lawyer in Tennessee?
There are many reasons you may want to hire a tax planning lawyer, especially when it comes to sorting out estate planning. A tax lawyer can help you develop a comprehensive estate plan, which usually includes creating your will and setting up additional trusts, in order to minimize estate and gift taxes. This can help you ensure that your assets are distributed according to your wishes.
Why Should I Choose Emmack Probate and Estate Law Group?
When you enlist the help of Emmack Probate and Estate Law Group, you can unlock a wide variety of perks. Not only do our clients’ membership opportunities allow you to make and modify relevant probate and estate planning documents, but they also give you access to helpful guidance and insight as you navigate the complex world of probate and estate tax law. Find out why so many of our clients have found success with our help.
FAQs
Can I Avoid Inheritance Tax in Tennessee?
Yes, you can completely avoid inheritance tax in Tennessee because the state has repealed its inheritance tax, as of January 1, 2016. As a result, no state-level inheritance or estate tax can legally be imposed on beneficiaries, heirs, or estates. Still, it can be hard to sort out certain aspects of your inheritance case that may prove more complex, so one of the ways you can avoid mix-ups and confusion is to hire a tax planning lawyer.
How Much Does It Cost to Hire a Tax Planning Lawyer in Tennessee?
Each tax planning case is unique, which means that it can be hard to apply a one-size-fits-all price tag for hiring a Tennessee tax planning lawyer. There are, however, still several consistent variables that tend to influence your overall cost, including the level of complexity, the amount of time your case needs to put a working plan in place, and who you hire to handle your tax planning case.
Is Hiring a Tax Planning Lawyer Worthwhile in Tennessee?
Many individuals have found that hiring a tax planning lawyer can help decrease the amount of stress and confusion they may have experienced otherwise. Tax planning lawyers can offer you guidance and advice that is tailored to your estate’s unique needs, factoring in your goals for the future of your estate and your family’s needs.
Do You Have to Pay Capital Gains on Inherited Property in Tennessee?
No, you do not pay Tennessee inheritance tax on inherited property because Tennessee does not impose an inheritance tax anymore. You may end up paying federal capital gains tax on any profit obtained by the sale of the property for more than its appraised value at the time of the previous owner’s death. This is because of the “stepped-up basis” rule.
Contact Emmack Probate and Estate Law Group today, and learn about how we can help you accomplish your tax planning goals.
