Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.


While it is not unusual for states to claim that they are the best place to live or have the best beaches. However, states are now promoting themselves that they're also great places to die. In 2015, four states will increase the amount that's exempt from state estate taxes, reducing or eliminating the tax that heirs will owe. On January 1, Tennessee's estate tax exemption will jump to $5 million from $2 million, Maryland's exemption will increase to $1.5 million from $1 million, and Minnesota's exemption will rise to $1.4 million from $1.2 million. On April 1, 2015, New York's estate tax exemption will increase to $3.125 million from $2.062 million. All still well below the federal estate tax exemption amount.
In 2016, Tennessee's estate tax will disappear, Maryland and New York will increase their exemption thresholds every year until 2019 (when they'll match the federal exemption amount) and Minnesota's exemption will rise in $200,000 annual increments until it reaches $2 million in 2018. These changes are important because taxes are one of the most common reasons, besides the weather, retirees relocate to another state.
Currently, 14 states and Washington, D.C., have state exemption amounts below the federal threshold, with maximum tax rates ranging from 12% to 19%. New Jersey's estate tax threshold is just $675,000, which could affect heirs of relatively modest estates. Seven states have an inheritance tax, with maximum rates ranging from 9.5% to 18%. Unlike an estate tax, which is levied on an estate before it's distributed, an inheritance tax is typically paid by the beneficiaries. Maryland and New Jersey have both estate and inheritance taxes.
One of the biggest reasons people live in Florida is because it has NO estate tax (only the federal applies). If you already have a comprehensive estate plan, make sure it's regularly updated to reflect revisions in your state's law. More changes are likely as states try to make their jurisdictions more attractive to retiring baby boomers. For example, legislation has been introduced in New Jersey to phase out the state's estate tax over a five-year period.