Does Where You Live Make Much Difference with Estate Planning?
Where you live can make a considerable difference in whether you pay estate or inheritance taxes after a loved one dies. The following example clarifies how this is true.
- Let’s say your elderly mother is failing physically and in an effort to make things easier for everyone, she decides to move from her Florida residence and buy a home near you in New York. On the surface, this decision appears simple and sound.
- What you may not realize is that Florida has no income, estate or inheritance taxes. However, New York has income taxes along with estate and inheritance taxes, which now apply based on your mother’s move.
- In addition, while she may be exempt from federal estate taxes if her estate is valued at less than $5,340,000 (in 2014), state exemptions only go up to $1 million. Because of her move, the estate planning she and your father so carefully put in place before he died no longer works in the way it was intended for preserving assets.
According to Forbes magazine, 19 states and the District of Columbia have estate or inheritance taxes. Also, some states have repealed their death taxes within recent years. An estate planning lawyer can tell you that it pays to know which states have such taxes and the extent of their taxation.
Before moving or making a major lifestyle change, consult with an experienced estate planning attorney. Law firms can help you avoid unnecessary taxation or other financial losses and assist you in preserving your estate.