Inheritance Tax Owed In Case Of Former Stepchildren

DES MOINES, Iowa (AP) — The Iowa Supreme Court has determined that siblings who inherited a portion of their stepfather’s estate in 2012 will have to pay inheritance taxes. The brother and sister had sued the Iowa Department of Revenue claiming a violation of equal protection under the Iowa Constitution.

The Associated Press reported Friday that Paula Tyler and Mark Alcorn received a $200,000 tax bill after receiving an inheritance from their stepfather, Donald Hitzhusen, who died in 2012. The stepchildren were raised by and later had cared for Hitzhusen, even though their mother divorced him in 2001.

In 2003 the Iowa Legislature changed the state's inheritance law, exempting stepchildren of divorce from qualifying for the inheritance tax allowable for natural or adopted children. Tyler and Alcorn claimed the legislature had no valid reason to treat one group different than another when it changed the law, according to the AP story.

But the state said lawmakers were justified in excluding stepchildren in a divorce from the inheritance tax exemption as way to promote close family relationships. The court agreed and said in its ruling that the single family unit no longer exists for stepparents and stepchildren following divorce so "favorable tax treatment of transfers from stepparent to stepchild is no longer needed to promote or protect that family."

Iowa is one of only six states that still collects inheritance taxes.

AP story By David Pitt; image via Pixabay