The Estate Tax Benefits of Living in California


There are some people in California who would grumble about the Federal estate tax, but all California residents should be thankful that the State of California phased out its State estate tax in 2005.  Unlike California, seventeen states and the District of Columbia impose their own estate taxes.

Many states impose their own estate and/or inheritance taxes.

And residents of most of these states end up paying state estate taxes even if they do not owe any federal estate tax, because almost all of these states have estate tax exemptions that are less than the $5 million federal exemption.  What’s more, ten states (Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Ohio, Oregon, Rhode Island, and Tennessee) and the District of Columbia have personal estate tax exemptions of $1 million or less.  For instance the state estate tax exemption in New Jersey is $675,000 and in Ohio it’s $338,333!

Five states – Indiana, Iowa, Kentucky, Nebraska, and Pennsylvania – do not impose estate taxes, but do tax inheritances by people living in that state.  Maryland, New Jersey, and Tennessee impose both estate and inheritance taxes.  If a California resident leaves a bequest to a resident of one of these states, some of the value of that bequest will likely end up going to the state in the form of inheritance tax.  However, depending on your situation, some careful planning may help your heirs avoid some or all of the inheritance tax.

If you have questions about the federal estate tax or state estate or inheritance taxes, contact Christl Denecke at DeneckePlanning.com or Christl@DeneckePlanning.com.

Helping you plan for your family’s tomorrow at every stage of your life.

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One Response to The Estate Tax Benefits of Living in California

  1. It is always hard to find well-informed people on this subject topic, you sound like you are aware of exactly what you are talking about! Bless you

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