States Beefing Up Estate Taxes in Anticipation of Federal
Reduction or Repeal
Yes, it looks like the chances are good Congress may put down
(or at least "de-claw") the federal estate tax. But according
to a recent article in The Wall Street Journal, individual states, desperate
for revenue, may seek to head repeal off at the pass, strengthening their
own estate taxes in order to counter the hit to their budgets a federal
estate tax cut or repeal might cause.
About a third of states have taken some action to shore up
their estate taxes. This includes separating the state estate tax systems
from the federal system. Connecticut, Washington, New York, Illinois, New
Jersey, and Massachusetts, just to name a few of the largest, all now have
their own estate tax systems.
Estate planning advisors are starting to advise their clients
with this in mind, some even recommending moving to a different state. But
this is not a decision to be made rashly. For one thing, not only your state
of residence but also any state where you might own real estate, may determine
whether you have to pay estate taxes.
It appears the fear of federal repeal on the part of states
may actually create even more complications for large estates hoping to
avoid estate taxes. Now, more than ever, it is imperative to seek qualified
estate planning counsel to make sure your assets are properly protected.
Source: Wall Street Journal, 6-29-05
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