It all depends on what you mean by "death taxes," let alone the state residency of the decedent and those in line to inherit.
Perhaps a real life scenario will help illustrate what I mean.
Just such fact pattern was addressed by NJ 101.5 in an article titled "What taxes apply when someone passes away?"
In this case a woman died, without a will (i.e., intestate) and her husband, children, and siblings all predeceased her.
It happens that the woman was a resident of New Jersey at the time of her death.
Consequently, the remaining relatives must be mindful of both "inheritance" and "estate" taxes.
The amount of tax depends on the transfer amount, or "taxable estate," and who is receiving the transferred amount.
The transfer amount is basically the fair market value of the decedent's assets plus any life insurance proceeds.
The state where the woman in this case resided at the time of her death is important, rather than where the heirs live.
So, if the woman was a New Jersey resident at the time of her death, then estate taxes could apply when assets are left to anyone other than her spouse.
The federal estate exemption amount is currently $5.45 million per person.
You are only taxed if more than the exemption amount is transferred at death.
However, if any lifetime taxable gifts were made by the deceased, then it is possible the estate could be subject to estate tax even if the estate is below than the exemption amount.
Because a "taxable gift" is one made to any individual in excess of the annual gift tax exclusion amount of $14,000 per person each year.
But if this New Jersey woman's taxable estate is below the exemption amount—after adjusting for any lifetime taxable gifts—there would be no federal estate taxes due.
New Jersey has a state estate tax exemption of only $675,000.
As a result, many residents the Garden State will be subject to state estate taxes, unless their estates are below this rather low exemption.
But wait, there is more.
Yes, there also is the issue of state inheritance taxes.
The taxable estate for New Jersey inheritance tax purposes has two important adjustments: gifts made within three years of death are generally added back, and life insurance proceeds are exempt if paid to a named beneficiary (but not if they were paid to the estate of the deceased).
The good news is that you only have to pay the greater of the New Jersey estate tax or the inheritance tax, but not both.
Also, immediate family members—including the spouse, grandparent, child, or grandchild—are exempt from the inheritance tax.
Note: Neither Kansas nor Missouri has its own estate tax or inheritance tax.
If you are unsure about your own risk exposure to "death taxes," contact an experienced estate planning attorney.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify. Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: NJ 101.5 (March 1, 2016) "What taxes apply when someone passes away?"