Even if the state you live (and, well, die) in doesn't have an estate or inheritance tax, your estate could be nicked if you own and maintain property or other tangible assets (such as a plane or a boat) in a state that does.
By Stephen K Lehnardt
As estate planning attorneys, we tend to spend so much time talking about the federal estate tax, it may appear that we forget about the pesky, often dangerous, state estate tax. Do you know if your state has an estate, inheritance or other death tax?
Fact: there are state-level estate taxes in many states. The exemption limits on these state estate taxes are often set at levels low enough to tag even middle class families. Consequently, it can be a big mistake to ignore these state estate taxes to your peril. So, do you have a false sense of security?
The problem with state taxes is that there are, at any given time, 50 moving pieces. Fortunately, Kiplinger sheds important light on the subject of state death taxes in a recent article titled “10 States With the Scariest Death Taxes.”
Even if you are living outside of the 20% of estate taxing states, you may own assets that cross into these death tax states. This could be a problem. For that matter, assuming you are still around and kicking, you may retire from your estate tax-free state to a state that has an estate tax.
The original article breaks down estate taxes state by state. However, the scariest state-level death taxes come out of New Jersey, Rhode Island, Minnesota, Oregon, Maryland, New York, Massachusetts, Connecticut, Maine, and Washington.
Do you, your family, or your assets enter into these states? And if so, how do you plan for both the state and the federal estate taxes? More importantly, how do you plan for all 50 state legislatures looking for additional revenue and a highly unpredictable Congress and White House?
For more information in Liberty, MO and the Kansas City Area about how to minimize estate and inheritance taxes and effective estate planning, and to access free information and tools to organize your estate, visit our estate planning website.
Reference: Kiplinger (December 2013) “10 States With the Scariest Death Taxes”