With the pandemic still looming over our lives, many people have been spending time considering what they want to do with their remaining years. For some people who are entering retirement, this includes relocating to a different state to save money on costly tax expenses. Regardless of where you decide to live in the United States, you will have to pay federal estate taxes.
Additionally, there is a total of eighteen states in the U.S. that require citizens to pay either estate taxes or inheritance taxes or both. Estate taxes are subtracted from an estate before all of the assets are distributed to heirs and other beneficiaries. The heirs of the deceased are responsible for paying inheritance taxes, regardless of whether they live out-of-state.
States with inheritance taxes include:
- New Jersey
Spouses are exempted from having to pay any inheritance taxes, and in New Jersey, it also applies to domestic partnerships. In some states, children and grandchildren are exempted, but not in Nebraska or Pennsylvania. Each state has certain exemptions, which are based on the amount of the inheritance and the heir’s relationship to the deceased. This is why it is crucial to consult with a seasoned estate planning attorney to calculate how much tax is due.
What Is the Most Expensive State to Die In?
From an inheritance tax and estate tax perspective, Maryland is probably the most expensive state to pass away in. In 2019, Maryland imposed a 16% tax on inheritances above $5 million for people who died in that calendar year. Although New Jersey recently scaled its inheritance tax from 0.8% to 16% on estates over $675,000, the state no longer imposes an estate tax on the estate of decedents who die on or after January 1, 2018.
Contact Dorcey Law Firm Today for Legal Advice
If you have more questions regarding estate tax planning, then please don’t hesitate to reach out to schedule a meeting with a talented attorney at our law firm. We will gladly take the time to review and discuss your state’s estate and inheritance tax rates so we can devise a strong strategy for the future. We can also discuss whether relocating makes sense financially.
To schedule a consultation with our friendly and compassionate lawyers, please call (239) 309-2870 today.