When most people think about estate taxes, if they think about them at all, they think about the federal estate tax. That is the estate tax that receives most of the attention in the national media.
For most people that is the only estate tax they do need to worry about. It is the only one that could apply to their estate.
Most people do not need to worry too much about it, since their estates will be below the historically high estate tax exemption at the federal level.
Nevertheless, there are other forgotten estate taxes that can create problems as the Wills, Trusts & Estates Prof Blog points out in "Don't Underestimate State Estate Taxes."
Eighteen states and the District of Columbia have their own estate taxes. (NOT CALIFORNIA, LUCKILY!!)
These state taxes often have much lower exemptions than the federal government.
The estate of someone who has planned only for the federal estate tax, might have to pay a large and unexpected bill to these states to cover the state taxes.
As is the case when the federal estate tax has not been adequately planned for, not planning for state estate taxes can create problems for estates that have few liquid assets and thus no simple way to pay the bill.
Fortunately, planning around state estate taxes can be done with the help of an experienced estate planning attorney.
Reference: Wills, Trusts & Estates Prof Blog (June 8, 2017) "Don't Underestimate State Estate Taxes."
Comments