Estate Taxes

Several years ago, my spouse and I set up revocable living trusts to minimize our federal estate taxes. Under current laws, we would incur no federal estate tax since the assets in each trust are below the $3,500,000 exemption for 2009. Unfortunately, even though there are no federal taxes would be owed, our estates might be responsible for state estate taxes, since our residence is in one of 22 jurisdictions (21 states and the District of Columbia), that levy estate taxes on amounts less than the federal exemption.

The state exemptions are as low as zero, with the majority of exemptions at $1 or $2 million. The state estate tax rates range from 3% to 20%, with the majority in the 15 to 16% range. At this point, I'm not going to worry too much about state estate taxes, since we're not planning to die anytime soon:-) However, as we get older, moving to a state without an estate tax may become a consideration, especially if our assets exceed the state exemption.

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This is not financial or estate planning advice. Please consult a professional advisor.

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