In the past, for many Floridians, as well as people in other states across the nation, consideration for the possible federal estate tax liability was among the factors taken into account during their estate planning. While the changes to the federal estate tax exemptions have resulted in fewer people owing federal estate tax on inheritances, there still may be situations in which it is a good idea to plan for death taxes.
A national media news outlet recently reported that people should be turning their attention from possible federal estate taxes when drafting their estate planning documents to the inheritance tax that may be levied at the state level. There are states whose estate tax may be as high has 19 percent, which means a large portion of the assets you intended to leave to your heirs will instead have to be paid to the state government. Not all states, however, tax inheritances and trust incomes.
For those who wish to protect their assets from estate taxes, there are a number of options available. One such option that experts reportedly recommend is the use of trusts, particularly revocable living trusts. Trusts are not necessarily right for everyone, however. It was also suggested that people either relocate to a better jurisdiction or set up their estate planning vehicle in a state where there are more favorable estate and inheritance tax laws.
Inheritance taxes are just one of the factors that may need to be considered when drafting your estate planning documents. This is where consulting with an experienced attorney may be of benefit. A lawyer can explain your options and help you to create a plan that fits your needs.
Source: The Wall Street Journal, Pay Attention to State Estate Taxes, Michael Foltz, Dec. 15, 2013