Monday, February 3, 2014
Despite the federal governments increase of the estate tax exemption, there are still states with an estate tax that impact the middle and upper-middle class. Paul Sullivan at the New York Times has identified 16 states that are below the federal tax exemption. One of the states that is significantly below the federal exemption is New Jersey with an exemption of $675,000 and a top rate of 16%. New York, Texas, Massachusetts, Minnesota and Connecticut also have an estate tax that is much lower than the federal estate tax. The raising of the estate tax has now shifted the focus on the state estate taxes.
Now, instead of searching for estate planning techniques, many people are deciding to move to Florida. In response to this, states with lower estate tax exemptions are trying to keep their rich citizens by raising exemptions, lowering rates, and possibly eliminating their estate taxes. Indiana and Ohio have already repealed their estate tax and other states are following suit.
See Conan Yuzna, Some States Moving To Decrease or Eliminate Their Estate Taxes, Wealth Strategies 2.0, Jan. 27, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) and Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.