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Beware of state estate taxes

CPA Chris Gamble discussed ways to prepare for state estate taxes Monday morning on News 8 at Sunrise.
CPA Chris Gamble discussed ways to prepare for state estate taxes Monday morning on News 8 at Sunrise.

Gamble said there are several important facts to know about state estate taxes.

1. Some states have estate taxes and some don't.  Currently 19 states, including New York, have some form of an estate or inheritance tax.  Combined the states represent about 33 percent of the U.S. population.

2. The exemption amount, which is the net value of assets an individual can own at death before any estate tax has to be paid, is different for almost all states.  For example, the New York state estate tax exemption is $2 million.

3. The federal estate tax exemption for 2013 is $5,125,000.

As to why some states have an estate tax, while others don't, Gamble said many states believe they need the added revenue.  Other states take the position an estate tax drives revenues down because residents are encouraged to leave to avoid paying the tax.

Gamble recommended meeting with a certified public accountant or attorney experienced with estate taxes to address the value of your estate and what your tax obligation may be.  You can then create estate planning documents or move assets to minimize the taxes.  Steps you can take include:

Creating trusts
Making gifts to charity
Making gifts to family members or friends
Even changing your home state to a state that does not have an estate tax

If you do decide to move to a state which does not have an estate tax, you must show evidence to the state tax department that you have made a significant shift in your life, including spending the majority of your time at the new address.

Gamble said it's important to revisit any estate plans periodically because laws can change as well as life circumstances.

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