Monday, December 3, 2018
Alaska is one of 38 states that does not levy an estate tax on its citizens, but those with substantially large estates may be subject to the federal estate tax. The estate tax is a tax applied to a recently deceased person’s estate and is applied before the money or assets pass on to the heirs and other beneficiaries.
The estate tax is different than an inheritance tax, which is what the heirs are required to pay after inherited assets or money from a person's estates. Alaska has no inheritance tax, but a person may be subject to another state's inheritance tax if someone who lived in that state leaves that person something in their will. If you should receive property from someone who lives in a different state, make sure to check the laws of that state.
Alaska also has no gift tax, but Alaskans are subject to the federal gift tax exemption of $15,000 per recipient per year. If a person should go over, it goes towards their lifetime estate tax exemption. A person's estate tax exemption is also portable to their spouse, meaning if you die first, you can pass the remaining amount of your exemption to your spouse.
The Great Frontier is also tax friendly in a number of other aspects: there is no state income tax, no taxing of Social Security, pensions and withdrawals from retirement accounts. There is no state sales tax, though local municipalities have a choice to charge, with a state average of 1.76%. Property taxes are higher than the national average but many areas exempt seniors. Cost of living in Alaska is high, with utilities being consumed at a higher rate because the winters are cold, dark, and long. But because of the Permanent Fund Dividend, all resident actually get paid to live in the state, often more than a $1,000.
See Ben Geier, Alaska Estate Tax, Smart Asset, November 28, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.