It would wise of people to consider an estate tax bill, regardless of the size of their estate.
There are some forgotten estate taxes that can create problems, according to Wills, Trusts & Estates Prof Blog points out in “Don’t Underestimate State Estate Taxes.”
Most people will pay attention to the federal estate taxes because that tax receives most of the attention in the national media.
For many, that is the only estate tax they need to worry about because they have no state estate tax. Others do not need to worry too much about it, since their estates will be below the historically high estate tax exemption at the federal level.
However, eighteen states and the District of Columbia still have their own estate taxes and these state taxes often have much lower exemptions than the federal government.
Thus, the estate of someone who has planned only for the federal estate tax might have to pay a large and unexpected bill to these states to cover the state taxes.
As is the case when the federal estate tax has not been adequately planned for, not planning for state estate taxes can create problems for estates that have few liquid assets and thus no simple way to pay the bill.
An estate planning attorney can guide you in creating an estate plan that meets your particular circumstances.
Reference: Wills, Trusts & Estates Prof Blog (June 8, 2017) “Don’t Underestimate State Estate Taxes.”
