Avoid Inheritance Taxes in Iowa? Adopt that Nephew!
Adoption can be a wonderful thing. My niece, in this picture, is adopted and she is a wonderful addition to our family. However, adoption can have some funky applications in the estate planning world. A recent ruling from the Iowa Supreme Court was interesting on a couple of issues involving an adoption: To avoid paying inheritance taxes for a bequest to a non-lineal descendant, a nephew was adopted by his aunt. Even though he was adopted by his aunt, the son's biological mother was still able to include an inheritance for her son. The first point is not all that unusual and I have advised clients of this very option. Basically, whether you are adopted or biological, as a child in Iowa, you do not pay any inheritance tax when you inherit from your parents. But, if you are a nephew, cousin, friend (basically a non-lineal descendant) there is an inheritance tax owed on an inheritance based on this table . So, if reducing a tax bill is worth changing your heritage, you c