A Few Options To Avoid State Estate Taxes

Most Americans will never have reason to worry about estate taxes due to the high net worth at death that is required to trigger the levy. But for those that do qualify for the tax, there are several options to avoid or lessen the tax burden including:

• To avoid state estate tax, moving out of the state will avoid the tax. While this is a drastic option for those that have long standing ties to a region, for those that are mobile and have few attachments it is the simplest way to work around state death levies.
• For those that will not or cannot move, a bypass trust may be used to lessen a tax burden. A bypass trust will allow the first spouse to die to shelter half the estate from passing to the surviving spouse which will lower the estate value for tax purposes when the second spouse dies.
• Outright gifts are a simple way to lower the value of an estate for tax purposes. However, gift limits are imposed on the amount that can be passed along without tax implications including in a year and over a lifetime. In addition, many states have look back provisions that will include gifts made a number of years before death and include the value in the estate.

See Ashlea Ebeling, Three Surefire Moves To Beat State Death Taxes, Forbes, October 16, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.