There are steps that residents of states with steep estate taxes can take–short of moving–to help minimize such bills or avoid them altogether.
By Stephen K Lehnardt
Federal government may cast a big shadow in terms of estate taxes, don't forget those state laws lurking in the shadows. If you are building your estate plan, be sure to find out which state estate taxes apply to you.
Residents of Missouri and Kansas do not need to worry about this issue—for now. Both Kansas and Missouri eliminated state estate or inheritance taxes in the last decade. However, the law can always change, and if you move to another state, you will want to check this issue.
MarketWatch recently provided some advice in an article titled “Protecting your estate in a high-tax state.”
Ironically, the estate tax scare at the federal level is less of a concern at present. The IRS has issued the estate and gift tax exemptions for 2014 and the new unified exemption/credit will be pegged at a cool $5.34 million. Unfortunately, the states that tax estates did not get the same memo.
Each state differs from the others and estate tax laws vary considerably. Certain states have their own forms of gift tax, estate tax, inheritance tax, and so on. There are even more subtle taxes such as those on real property.
Even if you live in one state, you might just be affected by the laws of another state if you own the wrong kind of property or conduct business there. Where you choose to retire could also upset your estate tax planning apple cart. In addition, you may be inheriting from family members who are residents in a tax-happy jurisdiction.
Consequently, it is important to follow the Boy Scout motto and always “Be Prepared.’
Reference: MarketWatch (October 28, 2013) “Protecting your estate in a high-tax state”