African business leaders increasingly hold property, brokerage accounts, and business interests in the United States, and that exposure carries tax consequences their families often discover too late. Estate tax and inheritance tax sound interchangeable, but they hit different people at different times, and the gap between them can determine how much of a family’s wealth survives a transition to the next generation.
The estate pays one tax while the beneficiary pays the other
An estate tax applies to the total value of a deceased person’s assets before any distribution happens. The estate itself, not the individual heirs, carries the bill. An executor or personal representative settles this obligation using estate funds before releasing anything to family members.
An inheritance tax works in reverse. It applies after assets reach the beneficiary, and the person who receives the inheritance pays it directly. A surviving spouse frequently escapes this tax altogether, while children and close relatives often qualify for reduced rates.
This distinction matters enormously for Nigerian and broader African families building wealth that spans continents. A Lagos-based entrepreneur holding US real estate faces a completely different tax calculation than one whose children later inherit shares in a Delaware-registered company.
Federal estate tax exemptions shield most families, but not all
The United States taxes estates that exceed 15 million dollars per person as of 2026, and that threshold rises with inflation each year. Fewer than one in a thousand estates in America actually owe this tax, according to the Center on Budget and Policy Priorities.
Some individual states set their own, much lower thresholds. Massachusetts, for example, taxes estates above 2 million dollars, meaning a family could avoid federal estate tax entirely while still owing money to the state.
For African high-net-worth individuals holding US property through trusts, LLCs, or direct ownership, the state where that asset sits matters as much as its size. A New York apartment and a Texas ranch can trigger very different obligations even at identical valuations.
Only five American states still collect inheritance tax
Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania remain the only states that impose inheritance tax as of 2026. Every other state has eliminated it.
A beneficiary’s relationship to the deceased shapes the rate they pay in these five states. Spouses typically pay nothing, children and grandchildren often receive reduced rates or full exemptions, and more distant relatives or unrelated beneficiaries usually face the highest rates.
An African family with an heir who happens to live in or inherit property located in one of these five states should factor this into any cross-border estate plan, since the tax applies regardless of where the deceased person lived.
A family can owe both taxes on the same inheritance
Estate tax and inheritance tax operate under separate legal frameworks, so both can apply to a single transfer of wealth. A large estate exceeding federal or state thresholds pays estate tax first. If that same estate distributes assets to a beneficiary in one of the five inheritance-tax states, that beneficiary then owes a second, separate tax on what they receive.
This layered exposure catches many international families off guard, particularly those managing US-based trusts or real estate portfolios without dedicated cross-border tax counsel.
Payment deadlines differ sharply between the two taxes
Federal estate tax comes due nine months after death, though the IRS grants filing extensions in certain circumstances. Even with an extension, the underlying tax payment often remains due on the original deadline to avoid interest and penalties.
Inheritance tax deadlines vary by state, since individual states, not the federal government, administer this tax. Beneficiaries inheriting assets located in Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania need to confirm that state’s specific filing window rather than assuming a uniform national rule.
What this means for cross-border estate planning
Families building wealth across Nigeria, other African markets, and the United States benefit from planning that treats these two taxes as separate problems requiring separate strategies. Lifetime gifting, charitable structures, and properly drafted trusts can reduce exposure to federal and state estate tax before death occurs.
Reviewing where specific assets sit, and where heirs currently live or plan to settle, helps families anticipate inheritance tax exposure long before it becomes an urgent problem. A qualified cross-border estate attorney, ideally one experienced with both US tax code and the family’s home jurisdiction, remains essential for anyone whose estate approaches these thresholds.
Frequently asked questions
Can an estate owe both estate tax and inheritance tax? Yes. A large estate can owe federal or state estate tax, and if it distributes assets to a beneficiary in one of the five inheritance-tax states, that beneficiary can separately owe inheritance tax on the same transfer.
Which US states currently impose inheritance tax? Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania remain the only states that collect inheritance tax as of 2026.
Who actually pays estate tax? The estate pays it, using the deceased person’s assets, before any distribution reaches beneficiaries. The executor or personal representative handles the filing and payment.
Who actually pays inheritance tax? The beneficiary pays it directly, after receiving the inheritance, and only in the five states that still impose this tax.
How long does a family have to pay these taxes? Federal estate tax is due nine months after death. Inheritance tax deadlines vary by state, so beneficiaries must confirm the specific rules where the inherited assets sit.
Do most African families holding US assets need to worry about these taxes? Most won’t owe federal estate tax given the 15 million dollar exemption threshold, but families with significant US real estate, business interests, or heirs in one of the five inheritance-tax states should still seek dedicated cross-border planning advice.
