The federal estate tax might grab headlines, but many states also have estate taxes that people need to be aware of when estate planning. The state estate taxes often have lower exemptions, so avoiding them is desirable if possible.
Some people think they do not need to worry about estate planning very much these days. Why? Because they do not have enough assets for their estates to be subject to the federal estate tax.
That is a mistake, because there are many other reasons to have an estate plan besides the estate tax. It is also a mistake because many states have estate taxes of their own that require careful planning to navigate. With proper planning, these state estate taxes can almost always be avoided.
A recent Forbes article took on this topic in "Three Surefire Moves To Beat State Death Taxes," which recommend the follow tactics:
- Move – Not every state has an estate tax, so you can move to a state without one. However, you need to be careful about appearing to have merely changed your address to avoid the estate tax. You need to make the move complete, and it is best to cut all ties with your former state.
- Bypass Trusts – These are trusts created at the time of death of one spouse. The trust is usually funded with assets up to the state's estate tax limit. The rest of the estate goes to the surviving spouse. When that spouse passes away, the estate tax bill will be less. These are complex instruments and you will need an estate planning attorney to assist you.
- Gifting – If you give assets away now, they will not be part of your estate and subject to the estate tax. However, make sure that you only do this after speaking to an attorney and accountant so that you do not face unnecessary tax problems.
Proper estate tax planning, whether at the federal or the state level, requires qualified estate planning assistance. This cannot be overemphasized.
If you live in Florida, where I have practiced Estate Planning for over 30 years, you may not need to pay Florida State Estate Tax. However, if you live in Florida part-time, and can claim residence in another state, you may be subject to that state's taxation rules for estates.
I can help! Call me (305-443-3104) right away for peace of mind.
- I'm an exceptionally experienced Florida Bar Board Certified Estate Planning Attorney,
- I'm a Florida Bar Board Certified Elder Law Attorney, focusing on ALL legal issues related to aging,
- have prepared over 4,000 estate plans in 30+ years in practice,
- have administered over 600 estates through Probate, and
- am a Certified Financial Planner Professional™, plus
- I am also a Florida Certified Public Accountant (CPA).
Of course, if you would like more information about General Estate Planning in South Florida, I have a very informative website you are welcome to visit for more information.
Reference: Forbes (October 16, 2015) "Three Surefire Moves To Beat State Death Taxes."