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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
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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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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