The federal estate tax has been in the news recently after the passage of the Tax Cut and Jobs Act, which doubled the exemption amount for estate, gift an generation-skipping taxes. In 2018, individuals can shelter $11.2 million, and couples can shelter $22.4 million from these taxes.
Many states have done away with estate taxes or tie their exemption level to the federal government’s, such as Hawaii and Maine. Consequently, people in those states are getting an automatic tax break.
Some other states have already passed legislation to do the same thing, and other states have recently repealed their estate taxes.
But there are still a couple of states that can be expensive places to pass away, as Forbes discusses in “Where Not To Die in 2018.”
Unfortunately, Massachusetts is tied with Oregon tied for the lowest estate tax exemptions in the country at $1 million. Oregon’s system is complex and depends on what type of property the estate holds and who the heirs are. Massachusetts has a much stricter system, so traditional estate planning (the use of credit shelter trusts to shield the first spouse’s exemption) is still essential.
As more and more states do away with their estate taxes, the pressure is mounting on those remaining states to either to scrap their estate taxes or at least to raise the exemptions.
If you live in an estate tax state, be sure that you have discussed the state tax with your estate planning attorney.
Reference: Forbes (Dec. 21, 2017) “Where Not To Die in 2018.”