Although the 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.
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 did not get the same memo.
The states are still different and vary considerably. Certain states have their own forms of gift tax, estate tax, inheritance tax, and so on. Some have 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 certain kinds 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.’
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Reference: MarketWatch (October 28, 2013) “Protecting your estate in a high-tax state”