Many people worry about estate taxes -- the taxes your estate pays after you die. However, currently very few estates end up paying estate taxes because the federal estate taxes only apply to the very rich, and most states don't have estate taxes. So unless your estate is larger than $11 million, or you live in one of the few states where estate taxes affect more modest estates, you shouldn't need to worry about estate taxes.
Here, find out whether or not your estate is likely to owe tax, and if so, how you can take steps now to minimize the bill.
Separately, just a few states still impose a separate inheritance tax. How much inheritance tax you pay depends, unlike an estate tax, on how closely you were related to the person who left you money.
The Tax Cuts and Jobs Act of 2017 doubled the federal estate tax exemption, making federal estate taxes an issue for only the very rich.
Very few people ever need to pay federal gift tax.
Quick answers to basic questions about estate and gift tax.
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Estate Tax: Will Your Estate Have to Pay?
Very few estates—only those larger than $11.58 million—might owe federal estate tax.
With the "annuity" variety of this trust, you may be able make a donation and have tax-free money left over for your family.
Keep the proceeds of your life insurance policy out of your taxable estate.
Reduce Estate Tax by Making Gifts
Making gifts during your life can provide you with tax savings and more.
Look Out for the Kiddie Tax When Leaving an IRA to a Minor
Naming a minor as the beneficiary of an IRA might not be the best choice.
The Charitable Remainder Trust: Do Good and Get Tax Breaks
Give to charity and get a tax benefit.
Using QDOTs to Plan for Noncitizen Spouses
This kind of trust can defer estate taxes for wealthy couples.
Even an estate that doesn't owe federal estate tax might owe the state.
The estate tax gets a lot more attention, but some estates have to pay a separate inheritance tax, which is imposed by six states.
Indiana’s inheritance tax is imposed on certain people who inherit money from someone who was an Indiana resident or owned property (real estate or other tangible property) in the state.
Anyone who inherits money or other property from someone in Iowa might owe state inheritance tax. The tax rate, however, is based on how closely the inheritor and deceased person were related.
Kentucky, like other states, exempts close family members from inheritance tax.
Most relatives who inherit are exempt from Maryland's inheritance tax.
The surviving spouse is exempt from inheritance tax, but other inheritors may have to pay.
New Jersey is one of only a few states that impose both an inheritance tax and a state estate tax.
Pennsylvania collects inheritance tax when property is left to people who weren’t closely related to the deceased person.