"With the federal estate tax disappearing for most people, state death taxes have emerged as a new worry. ... At the current level, only 5,500 estates a year are federally taxable. ... The problem is that most states with estate or inheritance taxes haven't raised exemptions to meet federal limits. That means thousands of taxpayers who now escape the federal levy could still get hit with a state death tax. As a result, tax advisers are tweaking bypass trusts that allow married couples to maximize exemptions from state taxes. They are advising taxpayers where to retire in order to pare or eliminate estate taxes. And they are counseling out-of-state taxpayers so that they don't get dinged for property they own in a state with a tough death tax. ... Others warn that even taxpayers who live in states without estate taxes, such as Florida or California, risk unpleasant surprises if they also own property in a state that does have one. ... This means that a taxpayer could live in estate-tax-free Florida, California or Texas and even spend most of his time there. But if he keeps an apartment in New York or a summer home on Cape Cod and has other ties to the area the properties might be assessed at death", Laura Saunders at the WSJ, 31 October 2009, link: http://online.wsj.com/article/SB125694593227919879.html.
If you own any out-of-state property have your estate planner review its potential for taxability or to change your "domicile". If you don't, you might subject your estate to an unpleasant surprise.
4 comments:
Ben Franklin was right.
one of statutes I like here at home in New Zealand is the 'Estate Duty Abolition Act 1993'. Perhaps in another few years it will not be reports about people leaving NY, but leaving USA, and taking up citizenship elsewhere.
Australia has been in the talks about tax reform. One of the main topics of discussion is also unfairness of the present superannuation system. Because superannuation contributions are taxed at a flat rate of 15%,the value of concessions on contributions increase as a person earns more income. In addition, they're also looking into simplifying the tax and transfer system. This is due to research findings that more than 70% of taxpayers go to accounting service providersto complete their tax return – more than any other country.
David,
You are exactly correct, and it's happening much sooner than many people may think. My Investor Visa has already been accepted by New Zealand. We'll be there in less than a year.
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