Some states will not be raising their estate tax exemption to the federal level.
President Trump raised the estate tax exemption threshold to $11.18 million per person.
This is a significant increase.
Does this mean you will no longer have to worry about paying estate taxes?
Some states have their own estate taxes with lower thresholds.
According to a recent Forbes article titled “States Rebel, Won't Conform To Trump Estate Tax Cuts,” this will be the case even for some states that previously tied their state exemption to the federal exemption.
They cannot afford such a large increase.
What are some of these states?
The previous exemption for DC was only $2 million.
It did increase, but not to the federal level.
It has been changed to $5.6 million.
Hawaii did not raise or lower the estate tax.
Instead, it will remain $5,490,000 for 2018.
For 2019 and beyond the exemption will be $5 million.
It also added portability.
What does this mean?
The surviving spouse can take advantage of "unused exemption" from his or her late spouse.
The estate tax threshold is $5.6 million for 2018.
Inflation adjustments will start in 2019.
The plan in 2017 was to phase the estate and gift tax exemptions to match the federal level before 2020.
This has been extended to 2023.
No matter where you live, you should work with an experienced estate planning attorney.
Estate planning involves more than merely minimizing taxes, but tax planning may require more focus depending on your state of residence.
Reference: Forbes (August 31, 2018) “States Rebel, Won't Conform To Trump Estate Tax Cuts”