It’s one of Benjamin Franklin’s most famous quotes: “In this world, nothing can be said to be certain, except death and taxes.”

Of course most people aren’t so certain about those taxes, particularly when it comes to taxes surrounding death and inheritance. Estate taxes—the so-called death taxes—have been a hot button issue for a long time, even though not everyone understands them and they vary state to state. A caller this week was confused about what she heard, what her attorney was telling her and what her family was saying about what part of her inheritance is taxable.

So before things get messy, make sure you have a rudimentary understanding of some of these basic taxes. The IRS makes a few things very clear in the case of death and taxes. When you inherit something there are two types of taxes: Estate tax and inheritance tax.  The estate tax, paid by the estate itself, includes the deceased person’s possessions, such as cash, accounts, real estate, stocks and bonds and other valuable goods like cars, boats, art pieces or rare collections. Inheritance tax is what you, the inheritor, may have to pay but, unless you have a very, very rich relative, it won’t be much.

There is no federal estate tax on property valued at or below $5.34 million.

The IRS collects the estate tax on all U.S. citizens and residents. The tax is levied on the deceased person’s estate as a whole, filed on a single estate tax return and paid out of the estate’s funds. But this estate tax is waived for any estate valued at or below $5.34 million. So, most s will not have to pay any federal taxes on an inherited estate. The IRS does not require that you list it on your income tax and it will not bump you into a different tax bracket.

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A few states DO require an estate tax or inheritance tax.

While there is no federal estate tax on property below $5.34 million, there may be a state tax depending on where the person you are inheriting property from lived. However, the states also have exemptions that may negate the state tax. For example, in Illinois, only those properties exceeding $4 million will necessitate an estate tax. The exemptions vary by state so be sure to research what your state requires.

A few states also require a separate inheritance tax, apart from the estate tax. Bankrate has a state tax page that lists all the state inheritance tax rules. These rules are subject to change so be sure to speak with an attorney or Certified Public Accountant(CPA) that knows the tax requirements for your state.

What about tax on retirement accounts, stocks or real estate investment properties?

If you inherit property that produces income such as interest, dividends, or rents, that income is taxable and reportable on your tax return. Make sure you speak with an attorney or CPA to understand how this type of inheritance will affect your taxes and plan ahead.

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