When it comes to estate planning for wealthy people in the U.S., considerable attention is given to the federal estate tax. So much scrutiny is given to the tax that many believe the tax is an extraordinary burden on far more people than it actually is.
Only a very small percentage of estates actually end up paying even a single penny in estate taxes.
Nevertheless, the federal estate tax is debated almost every year.
That is the case this year, since many believe the Trump administration and Republicans in Congress will seek to eliminate the tax entirely. If they do, it will not end all estate taxes in the country.
If avoiding the estate tax matters to you, then it makes a big difference where you live when you pass away, as the Wills, Trusts & Estates Prof Blog discusses in "Why You Should Be Careful Where You Die."
Fourteen states have their own version of the estate tax and they vary both in rates and in how much an estate can be worth before the tax kicks in.
Six states have an inheritance tax, which is similar. However, instead of taxing the estate, inheritance taxes are based on the amount the heirs receive and usually their degree of relationship to the decedent.
The heirs pay the inheritance tax, not the estate.
New Jersey and Maryland have both an estate tax and an inheritance tax.
It is important to understand state estate taxes, so you can ask your Cincinnati estate planning attorney what the rules are in your state and in any state you might consider moving to in your retirement years.
It will make a difference for your estate, much more so than the federal estate tax in many cases.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: Wills, Trusts & Estates Prof Blog (April 22, 2017) "Why You Should Be Careful Where You Die."