The federal government giveth–and some state governments taketh away. That’s why it is important to know a state’s estate and gift taxes rules before you decide to leave the Old Dominion. Virginia’s estate tax is the same as the federal government; not true of all states in the Union.
The Federal government may be bigger, but when it comes to estate planning you simply cannot forget state laws. If you are building your estate plan, ignore your state estate taxes (present or future) to your peril.
MarketWatch recently provided some advice in an article titled “Protecting your estate in a high-tax state.”
Ironically, the estate tax scare at the federal level is less of a concern at present. The IRS has issued the estate and gift tax exemptions for 2014 and the new unified exemption/credit will be pegged at a cool $5.34 million. Unfortunately, not all states got the memo.
The states are still different and vary considerably. Certain states have their own forms of gift tax, estate tax, inheritance tax, and so on. There are even more subtle taxes such as those on real property.
Even if you live in one state, you might just be affected by the laws of another state if you own the wrong kind of property or conduct business there. Where you choose to retire could also upset your estate tax planning apple cart. In addition, you may be inheriting from family members who are residents in a tax-happy jurisdiction.
Consequently, it is important to follow the Boy Scout motto and always “Be Prepared.’
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: MarketWatch (October 28, 2013) “Protecting your estate in a high-tax state”