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Another Reason to Move Down to Florida - Top Ten States With Big Estate Tax Bites


Another Reason to Move Down to Florida- Top Ten States With Big Estate Tax Bites

Depending on where you live, your state’s estate tax could cost your heirs a significant portion of your estate. Some states tax estates valued at only $1.5 million or less. Remember that the value of your home is included for tax purposes, and so can proceeds from life insurance, depending on who owns the policy. In other words, your estate plan needs to address the issue of your state’s estate tax.

Kiplinger’s article, “States with the Scariest Death Taxes,” says that 14 states and DC impose an estate tax, and six states impose an inheritance tax. But many states are increasing their estate-tax exemptions to keep rich retirees from moving to more tax-friendly states like Florida.

New Jersey will increase its estate tax exemption to $2 million in 2017, so it has been dethroned as the worst state for your estate. Here’s the new list.

  1. New York. The Empire State is upping its estate-tax exemption to the point where on January 1, 2019, it’ll match the federal threshold. But watch out: New York’s estate tax has a nasty catch. If your estate exceeds the threshold by 105%, the entire estate is taxed.
  2. Vermont. The state’s estate tax, coupled with its steep income-tax rates, makes it a rather terrifying spot for wealthy people. Vermont is also number one for the least tax-friendly states for retirees.
  3. Maryland. This state is beginning to be a more tax-friendly place to die, with its estate-tax exemption rising every year until 2019, when it’ll match the federal exemption.
  4. Washington. While the Evergreen State's estate tax rates are unusually high, it does provide an additional $2.5 million deduction for family-owned businesses valued at less than $6 million. The estate tax exemption is indexed to inflation.
  5. Connecticut. This is the only state with a state gift tax on assets you give away while you’re alive, and you have to file a state gift tax return every year to identify any such gifts. However, taxes are due only when the aggregate value of gifts made to any individual since 2005 is over $2 million.
  6. New Jersey. The state's estate-tax threshold will rise to $2 million on January 1, and the tax will go away permanently in 2018. However, New Jersey will continue to impose an inheritance tax. Parents, grandparents, descendants, children and their descendants, spouses, civil union partners, domestic partners and charities are exempt from the state's inheritance tax. There’s also a $25,000 per-person exemption for siblings, sons-in-law, and daughters-in-law. However, other heirs are taxed on inheritances valued at $500 or more. They also have "looks back" to gifts made to non-exempt individuals within three years prior to death. These gifts are also subject to the inheritance tax, unless the beneficiaries can prove that the gifts weren't made "in contemplation of death."
  7. Rhode Island. They adjust their estate-tax threshold here annually for inflation, but with low inflation, the exemption remained unchanged in 2016 and probably won't change much in 2017.
  8. Minnesota. Not only does the Gopher State have a low exemption level for estates, but when calculating the value of your estate, they look back to include taxable gifts made within three years before death.
  9. Massachusetts. One of just two states with its exemption at $1 million. Massachusetts is less-friendly to estates than most other states.
  10. Oregon. Once the new estate tax threshold kicks in for New Jersey, Oregon will become the most expensive place to die. The estate tax exemption level is $1 million, and a 10%-16% tax rate is imposed on estates valued at $9.5 million or more.

Not everyone is able or willing to move simply because of a state’s estate tax structure, but if you are a resident of a high tax state, you’ll want to have a good estate plan in place.

Do you want to move to Miami-Dade, Broward, or Palm Beach counties in Florida? Laws are constantly changing-- has your estate plan been reviewed in the last 2-3 years? Call me (954-888-1747) right away for peace of mind. I can help!

  • My practice is exclusively estate planning and probate,
  • I have prepared numerous estate plans in 16 years of practice,
  • I have administered estates and trusts through Probate all over Florida,
  • I am a Certified Financial Planner Professional™, and
  • I am here for YOU today and there for your FAMILY tomorrow.

Reference: Kiplinger’s (October 2016) “States with the Scariest Death Taxes”

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