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2014 State Death Tax Information

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The new year brings some changes to state death taxes in several states. Learn all about these changes here.

Wills & Estate Planning Spotlight10

Obama's 2015 Budget, Florida Personal Representatives, Financial Transaction Tax Top Most Read Wills & Estate Planning Blogs in March 2014

Tuesday April 15, 2014

President Obama's 2015 budget as it relates to estate planning, who can't serve as a Personal Representative in Florida, living wills and trusts, and the financial transaction tax topped the most read Wills & Estate Planning blogs in March 2014:

Top 5 Blogs Posted in March 2014

  1. Obama's 2015 Budget and Estate Planning - Everything Old is New Again
  2. Who Can't Serve as Your Personal Representative in Florida?
  3. Living Will vs. Living Trust - Do You Know the Difference?
  4. What is the Financial Transaction Tax and Why Should You Care About It?
  5. Living Trust vs. Testamentary Trust - Do You Know the Difference?

Meanwhile, the most read blogs in March 2014 that were posted at any time were just a little different from those that were the most read in February 2014:

Top 5 Blogs Posted at Any Time

  1. 2013 Estate and Trust Income Tax Brackets
  2. 2011 Gift Tax Exclusion - Annual Exclusion vs. Lifetime Exemption
  3. What Does Per Stirpes Mean?
  4. When is a Federal Estate Tax Return Required to be Filed?
  5. Tax Day is Looming, So Do You Need File IRS Form 1041 for Your Revocable Living Trust?

Read more:

How to Determine if You Need to File a Gift Tax Return for Gifts You Made in 2013

Saturday April 12, 2014

It's that time of year again - time to think about that other tax return that is due on April 15 of each year, for taxable gifts that were made during the course of any given year - IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Here is how to determine if you will need to file a gift tax return for gifts that you made during 2013:

  • Did you give anyone other than your spouse who is a U.S. citizen a gift or series of gifts during 2013 which exceeded $14,000 in value? If you answer yes to this question, then you will need to file a 2013 Form 709. Note that gifts made to one individual during 2013 that do not exceed $14,000 in total value qualify as annual exclusion gifts.

  • Did you give your spouse who is not a U.S. citizen a gift or series of gifts during 2013 which exceeded $143,000 in value? If you answer yes to this question, then you will need to file a 2013 Form 709.

  • Did you give anyone a gift or series of gifts during 2013 that were considered gifts of a future interest? If you answer yes to this question, then you will need to file a 2013 Form 709.

  • Did you receive a gift or series of gifts during 2013 that exceeded $14,000? Even if you answer yes to this question, you will not have to file a 2013 Form 709, nor will you have to include the amount gifted to you in your taxable income -think about it, if you did include the amount given to you in your taxable income, then how could it have been a gift in the first place? It is the person who makes the taxable gift who must file a gift tax return, not the person who receives the gift.

If you need to file a 2013 gift tax return but will not be able to file it on or before April 15, 2014, then there are two ways for you to receive an automatic six-month extension of time to file the return:

  1. If you timely file Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return, to automatically extend the time to file your personal income tax return, then this will also automatically extend the time to file your gift tax return.

  2. If you do not need to extend the time to file your personal income tax return, then you can receive an automatic extension to file your gift tax return by timely filing Form 8892, Application for Automatic Extension of Time to File Form 709.

Note that as with income taxes, any gift taxes that will be due for gifts that you made during 2013 must be paid on or before April 15, 2014, regardless of whether you request an automatic six-month extension of time to file Form 709, otherwise interest and possibly penalties will accrue until the gift tax is paid in full.

Note that for 2014, the annual exclusion from gift taxes remains at $14,000.

Say Goodbye to Minnesota's Gift Tax, Hello to Higher Estate Tax Exemption

Wednesday April 9, 2014

For those who were surprised by Minnesota's enactment of a state gift tax that went into effect on July 1, 2013, you will be just as surprised to learn that the gift tax has been completely repealed retroactively. And if that's not confusing enough, the Minnesota estate tax exemption was increased from $1,000,000 to $1,200,000 retroactively back to January 1, 2014. And that's not all - the Minnesota estate tax exemption will increase annually by $200,000 until it reaches $2,000,000 in 2018:

  • 2015 exemption - $1,400,000
  • 2016 exemption - $1,600,000
  • 2017 exemption - $1,800,000
  • 2018 exemption - $2,000,000

But hold on, that's not the end of it:

  • The estate tax rate was tweaked so that the first dollars are taxed at a 9% rate which maxes out at 16%.
  • Married couples will be allowed to use ABC Trust planning in order to defer the payment of all estate taxes until after the death of the second spouse.
  • The law enacted in 2013 with regard to taxing a nonresident decedent's interest in a pass-through entity was also modified to exclude certain publicly traded entities, but it still applies to entities taxed as partnerships or S corporations that own a closely held business, farm, or cabin.

Photo: Minnesota Welcomes You Sign, by VisionsofAmerica/Joe Sohm/Photodisc/Getty Images

Further reading:

New York Estate Tax Exemption Increases More Than Two Fold And Won't Stop There

Monday April 7, 2014

Listen up New Yorkers: Effective April 1, 2014, the New York estate tax exemption increased from $1,000,000 to $2,062,500. And that's not all - the New York exemption will continue to increase on an annual basis until it matches the federal estate tax exemption in 2019 as follows:

  • Deaths between April 1, 2014 and March 31, 2015: $2,062,500
  • Deaths between April 1, 2015 and March 31, 2016: $3,125,000
  • Deaths between April 1, 2016 and March 31, 2017: $4,187,500
  • Deaths between April 1, 2017 and December 31, 2018: $5,250,000
  • Deaths on or after January 1, 2019: New York exemption will match federal exemption

The federal estate tax exemption has been indexed for inflation on an annual basis since 2012 and will continue to be indexed in the future. In 2014 the federal exemption sits at $5,340,000 and is expected to be $5,900,000 in 2019.

A couple of other things to note about the changes made to New York estate tax and gift tax laws:

  1. Although there was a proposal to cap the top estate tax rate at 10%, the maximum rate will remain at 16%.
  2. If an estate is valued at as little as 5% more than the New York estate tax exemption, then the estate will be taxed at its full value instead of just the value that exceeds the exemption (see The New New York Estate Tax Beware A 164% Marginal Rate by Forbes writer Ashlea Ebling for an example of how this New York estate tax "cliff" will work).
  3. The New York estate tax exemption will not be "portable" between spouses like the federal estate tax exemption.
  4. Gifts made by New York residents on or after April 1, 2014 and before January 1, 2019, will have a three year look-back period, meaning that the gift will be pulled back into the taxable estate if the person making the gift dies within three years of making the gift.

Photo: New York State Capitol, Albany, by VisionsofAmerica/Joe Sohm/Photodisc/Getty Images

Further reading:

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