When considering your own estate or someone else’s, don’t forget your potential liability for state death taxes.
With the new estate tax laws in place, including the $5 million exemption ($10 million for a married couple), many people are enjoying a false sense of security about any potential estate tax liability. First, as Forbes recently pointed out, keep in mind this new generous law expires at the end of 2012 … and it’s anyone’s guess what will happen next.
In the meantime, also remember that if your state imposes a state estate or inheritance tax, the likely outcome is that combined federal and state taxes could pack a surprising punch for those above the $5 million exemption amount. The federal estate tax rate runs 35 percent, but depending on where you live, combined federal and state tax rates could run as high as 48 percent.
Forbes has a handy chart here for you to review the impact of combined state and federal estate taxes by state.
You can learn more about estate taxes on the Estate Tax Practice Center on our website. Also, stay informed about changes in the law that could affect you and your estate planning by subscribing to our free monthly estate planning e-newsletter.
Reference: Forbes – Robert W. Wood (July 7, 2011) “Will Ohio Estate Tax Repeal Trigger More?”