When thinking about estate taxes, most people consider the federal estate tax. However, state estate taxes play an equal role in many estate plans. For that reason, it is important to make note when a state is considering changing its estate tax.
State estate taxes have been known to give the unwary headaches. Many non-professionals plan for the federal estate tax, but fail to account for the estate tax in their own states. This often leaves an unintended and unnecessary bill that must be paid by the estate.
Other times, a professional estate plan is done, but the person who received the estate plan moves to another state with a different estate tax law and fails to have the estate plan remade to account for the new state’s estate tax.
If you live in Massachusetts or might someday move there, there may be good news on the horizon about the estate tax. State Representative Shawn Dooley has submitted a proposal to reduce the state’s estate tax.
The story was reported by the Sun Chronicle in “Attleboro area state rep proposes cut in Mass. estate tax.”
The proposal would achieve its goal by doubling the current estate tax exemption. While Rep. Dooley acknowledges that the state would lose revenue from the estate tax, he believes that cutting the estate tax would encourage more elderly people to stay in Massachusetts and thereby increase the state’s revenue from other taxes.
Even if you do not live in Massachusetts, let this serve as a wakeup call. States do have estate taxes that you need to account for in your estate plan.
Reference: Sun Chronicle (January 13, 2015) “Attleboro area state rep proposes cut in Mass. estate tax“