Apparently there are states that don't have an 'estate tax', but do levey an 'inheritance tax' on the person receiving the benefit; see last paragraph.
States Inheritance Tax Laws
States that currently collect a tax on inherited estate money or property are Connecticut, Maryland, Massachusetts, New Jersey, Nebraska, Pennsylvania, Oregon, Indiana, Kansas, Louisiana, Kentucky, and Iowa. Instead of imposing an estate tax in this situation, there are many states that impose an inheritance tax.
Since each state is likely to tax their residents differently, individuals can research the inheritance tax laws at their State Government website or hire the services of a professional tax attorney.
There are also many state governments that regularly update their inheritance tax guidelines, and many states are even considering completely dropping the inheritance tax. This is why it is important for taxpayers or their tax attorneys to keep up-to-date on the latest inheritance tax laws.
The process the states use to tax money or property that was inherited is a little bit different. States that have an inheritance tax do not require the money to come from the estate. Instead, they require that the individual who receives the inheritance to file and pay any taxes due on the money or property they inherited.
I hear and I forget. I see and I remember. I do and I understand.--Confucius