State and federal estate taxes
may be the most notorious example of this, to the extent that they are even colloquially referred to as "death taxes"; however, their reach at the federal level has been greatly curtailed and will affect only those individuals who have accumulated substantial wealth.
Changes at the federal level will more than double that figure, meaning Maryland residents with estates valued at $11.2 million or less would pay no Maryland or federal estate taxes
Altogether state inheritance and estate taxes collected $5.1 billion in fiscal 2016, accounting for 0.6% of state tax recollections, and federal estate taxes
brought in $21.4 billion, or less than 0.7% of federal tax revenues.
Since in 2017 the federal estate tax exemption is $5.49 million per person, a married couple can potentially pass on almost $11 million to their heirs free from federal estate taxes
. It is important to note that portability must be elected on the estate tax return of the first deceased spouse, even if that spouse does not owe estate tax.
According to most estimates, more than 99% of families will have no exposure to federal estate taxes
(see Paul Sullivan, "The End of a Decade of Uncertainty Over Gift and Estate Taxes," The New York Times, Jan.
With the federal estate tax exemption now at $5.34 million and likely to be even higher in 2015, few taxpayers need to plan for federal estate taxes
. That's especially true if you're married because so-called exemption "portability" between spouses effectively gives couples the ability to bequeath up to $10.68 million to their loved ones in 2014, free of federal estate tax.
A relatively larger share of commercial farms is projected to owe federal estate taxes
in 2013 (Figure 1).
If the federal estate tax exemption amount stays at the $5 million level or close to it, then certainly fewer estate owners will have to worry about federal estate taxes
. I see no reason why the high-net-worth estate owner will not continue to look to life insurance to provide the liquidity needed to pay future estate taxes, even if the amount needed is less.
The court held that the Code specifically states the only taxes eligible for the credit are federal estate taxes
, and the Nevada estate tax is not a federal estate tax.
Joe's estate of $26,532,977 would face federal estate taxes
In 2009, estates less than $3,500,000 were shielded from federal estate taxes
, provided the estate had been properly planned.
The balance of the estate passes to a residuary QTIP trust, allowing the executor to make a QTIP election to zero out federal estate taxes
(a disclaimer of property may also suffice)22 and an Illinois QTIP election over the $1.5 million gap amount.