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Chapter 4. Estate Planning > State Estate Taxes

State Estate Taxes

As the federal estate tax laws gradually increase the amount of the exemption over the next few years, the states, which generally took as their share of the estate tax a portion of the federal estate tax, are finding that their estate tax revenues will be going down at a time when their need for revenue is increasing. In response to this situation, many states have already changed their estate taxes to tax estates with less money than would result in a federal estate tax. Massachusetts and Minnesota, for example, in 2003 make estates of $700,000 subject to estate taxes although no federal estate tax would be required unless the estates were more than $1 million.

With home prices having skyrocketed in recent years, many people are finding that their estates might be subject to state estate taxes even if they do not require the payment of a federal estate tax. If you think you might be subject to a state estate tax, you should revisit your estate planning to make the necessary fine-tuning to provide for these changes in the state estate tax laws. Or you might want to consider moving. Alabama, Florida and Nevada have specific provisions in their state constitutions that prevent the states from making separate estate tax laws.


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