[TheRealVille]

Oops, you got me. I looked at the federal table wrong. However, Kentucky inheritance and estate tax can be as high as 16% for class B and C decendents, depending on the situation.

Class B and C aren't even kids. That is nieces and nephews, and such. There is no inheritance tax for leaving money or property to your kids in Kentucky.

INTRODUCTION
Kentucky has two death taxes.
Inheritance Tax
The Kentucky inheritance tax is a tax on a beneficiary’s right to receive property from a deceased person. The amount of the inheritance tax depends on the relationship of the beneficiary to the deceased person and the value of the property. Most of the time, the closer the relationship the greater the exemption and the smaller the tax rate. All property belonging to a resident of Kentucky is subject to the tax except for real estate located in another state. Also, real estate and personal property located in Kentucky and owned by a nonresident is subject to being taxed.
If the inheritance tax is paid within nine months of date of decedent’s death, a 5 percent discount is allowed. The tax due should be paid when the return is filed. However, if the beneficiary’s net inheritance tax liability exceeds $5,000 and the return is filed timely, an election can be made to pay the tax in 10 equal annual installments. The first installment is due at the time the return is filed. The portion of the tax deferred is charged with interest at the rate established by law beginning 18 months after the date of death.
There are three classes of beneficiaries: Class A, Class B, and Class C. Class A beneficiaries include:
surviving spouse, parent, child, grandchild, brother, sister, half- brother, and half-sister
If the date of death is after June 30, 1998, all Class A beneficiaries are exempt from paying Kentucky inheritance tax.
Class B beneficiaries include: niece, nephew, half-niece, half-nephew, daughter-in-law, son-in-
law, aunt, uncle, great-grandchild
Note: nieces and nephews by marriage and great-nieces and great-nephews are Class C beneficiaries.
Class B beneficiaries receive a $1,000 exemption and the tax rate is 4 percent to 16 percent. See tax chart on pages 6 and 7.
Class C beneficiaries include all persons not included in Class A or Class B. Cousins are considered Class C beneficiaries. Class C beneficiaries receive a $500 exemption and the tax rate is 6 percent to 16 percent. See tax chart pages 6 and 7.
1
Estate Tax
Since January 1, 2005 there has been no Kentucky estate tax, but it could come back on January 1, 2013. The federal Economic Growth and Tax Relief Reconciliation Act of 2001 enacted a phase out of the state death tax credit on the United States Estate (and Generation-Skipping Transfer) Tax Return, federal Form 706, by December 31, 2004. This phase-out was not made permanent and was to end on December 31, 2010. On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act), which extended this phase-out through December 31, 2012.
In the past, the estate tax was calculated as the difference between Kentucky inheritance tax and the state death tax credit allowed on the United States Estate (and Generation-Skipping Transfer) Tax Return, federal Form 706. Presently, a deduction for state death tax paid is allowed under federal law.

http://revenue.ky.gov/NR/rdonlyres/6D844...e_2011.pdf