Don’t Forget About State Estate and Inheritance Taxes

With all the buzz about the future of the federal estate tax, estate planners should not forget about state estate and inheritance taxes.  While the current federal estate tax exemption of $3.5 million means that most estates will not be subject to a federal estate tax, state estate and inheritance tax exemptions are not always as generous.  

The Wall Street Journal has provided a useful chart listing states that have a state estate or inheritance tax, with corresponding exemption amounts and maximum tax rates.  The chart lists 23 states and the District of Columbia as having an estate or inheritance tax. Additionally, tricky domicile issues could subject residents of other states to state estate or inheritance taxation in a state with the tax.  

See Laura Saunders, State Death Taxes are the Latest Worry, WSJ, Oct. 31, 2009.

Special thanks to all my readers who brought this article to my attention.