Inheritance traditionally has referred to whatever one receives upon the death of a relative due to the laws of descent and distribution, which apply when there is no will. However, the modern usage of inheritance has come to mean anything a person receives from the estate of a decedent, whether by the laws of descent or as a beneficiary of a will or trust.
In some states, an inheritance tax may apply to gifts received from a decedent. The tax is based upon a person’s (beneficiary’s) right to receive money or property which was owned by the decedent at the date of death. This is in contrast to the Federal estate tax, which is a tax upon the entire amount of property owned by the decedent at the time of death. Also, federal tax rules have special provisions for the valuation of inherited property.