Is an Estate Tax Part of
Your State's Revenue Strategy?

The subject of a state-imposed estate tax or an inheritance tax (where the person receiving the money, the beneficiary, is taxed) rarely enters the news stream.

We are conditioned to think that we do not need estate planning tools such as trusts unless our assets exceed a lofty figure such as $1 million or more, since the federal government has historically exempted such amounts from the federal tax.

But if you live in Ohio, for example, your estate would be taxed 7% by the state after only the first $338,333 was exempted.

What the Feds Did and What to Expect from the States

For 2011-2012, the federal government exempted up to $5 million per person from estate taxes. Amounts above this are taxed at 35%. Had the new law not been passed, the exemption was to return to only $1 million, with the top tax rate at 55%.

It may be that in response to this change at the federal level states that now have estate or inheritance taxes may change policy some time in 2011. Or those that do not presently tax may decide to do so.

It pays to stay informed, as estate planning strategies such as bypass trusts and marital trusts can still save families many thousands of dollars.

Even if you don't see your state on the chart below, bookmark your state's Department of Revenue and/or sign up for alerts on tax issues so you stay informed.

Return From Estate Taxes to Aging Home