How Estate Taxation Planning Differs From State to State
Estate taxation planning may be different for individuals who live in different states. The major reason for this is each state’s respective death tax laws. When an individual passes, they may have to pay federal death taxes if their estate is larger than $5.4 million dollars and/or state death taxes depending on which state they live in. Each state is subject to the federal tax, but may also be subject to state tax. Florida is one of the few states that does not have any death or inheritance taxes. The death tax limits may change from year to year, therefore, it is important to check whether the limits have changed each year you have estate planning in place.
For instance, residents passing away in Massachusetts are subject to state tax for all of their assets above 1 million dollars (in addition to federal tax for assets exceeding $5.4 million dollars). Residents of Massachusetts would greatly benefit from trust planning to avoid paying Massachusetts taxes. Assets like homes can be deeded to qualified personal residence trusts or other trust planning mechanism in order to both avoid probate and achieve tax-planning benefits.
In New Jersey, the state death tax is applied to assets above and beyond $675,000.00. Residents of New Jersey especially need basic trust planning as well as advanced estate planning in order to keep their estate from paying an exorbitant amount of taxes at their passing. New Jersey also has inheritance tax.
If an individual is a “snow bird” of Florida and lives in Florida for six months or more out of the year, it is sensible for that resident to move their primary residence to Florida to avoid such inheritance taxes. New Yorks death taxes are very close to the federal limit, therefore, New York residents may not have to worry about death taxes as much as Massachusetts and/or New Jersey residents (at least at this time).
Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.