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David P. McCabe,
WMCP®, ChFC®, CLU®
Financial Planner
Nathaniel D. High, RICP®
Financial Planner
Nicholas J. Over, CFP®
Financial Planner
Sara E. Martin
Operations Manager
Jennifer A. McCabe
Client Service Specialist
jennifer.mccabe@prudential.com
Centuria Financial Group
2333 Baltimore Blvd Suite B
Finksburg, MD 21048
Phone: 443-952-7232
September/October 2022
Does Your State Have Death Taxes?
If your estate is worth more than $12.06 million at your death—$24.12 for married couples—the federal government will want a piece of it. But did you know that several states also impose estate or inheritance taxes on your assets?
Estate Tax Versus Inheritance Tax
State estate tax is imposed on the net value of a decedent’s taxable estate after exclusions and credits are deducted. The tax is paid by the estate before assets are distributed to heirs.Inheritance tax is paid by the decedent’s heirs on inherited assets. The amount generally is based on the amount of the bequest and may depend on the heir’s relationship to the deceased. A surviving spouse is usually exempt from the tax, while the deceased’s children, distant relatives or unrelated heirs may be taxed by some states.
Which States?
Seventeen states impose estate or inheritance taxes, while one state—Maryland—imposes both. States that levy estate tax are Connecticut, Hawaii, Illinois, Massachusetts, Maine, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia.States that impose an inheritance tax are Iowa, Kentucky, Nebraska, New Jersey, and Pennsylvania.
While federal estate tax rates range from 18% to 40%, state estate and inheritance tax rates and threshold amounts vary from state to state.
Reduce the Tax Impact
If your estate could be subject to federal and state estate or inheritance taxes, you can take steps to minimize their impact.
- Spend down your assets.
- Make gifts to family and friends. In 2022, you can gift $16,000 each to as many people as you choose.
- Donate to charity. Bequests you make to a qualified charitable organization are deductible from your gross estate.
- Shelter assets in a trust. One option is to create an irrevocable life insurance trust (ILIT) to hold a life insurance policy for the benefit of a beneficiary or beneficiaries you name.
Keep in mind, though, that you’ll no longer have access to the assets placed in the trust.
Your tax, estate, and financial professionals can discuss strategies to help minimize estate and inheritance taxes. By working together, you can create a sound financial strategy.
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David P. McCabe, Nathaniel D. High, and Nicholas J. Over are Financial Planners with, and offer securities and investment advisory service through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial.
LPLE and LPL Financial are not affiliated with Centuria Financial Group.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
Centuria Financial Group and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.