Where do you call home and how does it affect your estate tax?

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Where do you call home and how does it affect your estate tax?

  1. 1. About 15 states and the District of Columbia impose an inheritance or estate tax. The tax rates range from a few percent to 19 percent in Washington State. As the typical state exemption rate is much lower than the current federal exemption, the middle class is finding themselves still stuck with a death tax. In addition, the federal rule allowing spouses to “port” their deceased spouse’s exemption is only followed in Hawaii. What’s worse, as with income taxes, multiple states may lay claim to your estate as being taxable. And, even if you die as a resident of a state that doesn’t have an estate tax, your estate could still be hit with estate tax if you own property or other tangible assets (such as a plane or a boat) in a state that does. As a general rule, while a person can have many residences, he or she can have only one domicile. Notwithstanding this rule, there is nothing to prevent two states from each independently determining that a taxpayer is domiciled in the respective state. The factors set forth in last month’s issue of determining domicile and residency for purposes of income taxes apply to the determinationofwhichestatespaytheestate/ inheritance tax. In a court or administrative cases where the state Department of Revenue/Taxation has made a determination that the person is domiciled in the state, the taxpayer typically bears the burden of proof of establishing that he or she is not domiciled in the state. Estate Tax vs. Inheritance Tax What’s the difference between an inheritance tax and an estate tax? An inheritance tax is based on who receives a deceased person’s property and how the beneficiary is related to the deceased person, while an estate tax is based on the value of the deceased person’s estate and not on who gets what. For more informationonthetypeoftaxandtheavailable exemptions see: http://wills.about.com/od/ stateestataxes/a/stateestatetaxchart.htm. The Lesson: You must pay attention and take steps to avoid not just income tax, but estate and/or inheritance taxes as well. Discuss your options with your financial advisor today. WHERE DO YOU CALL HOME AND HOW DOES IT AFFECT YOUR ESTATE TAX? May 2014 Trust Connection 972.960.1001 8350 N. Central Expressway Suite 1800 Dallas, TX 75206 TRO Contacts: Dusty Wallace, J.D. , CFP® Dan Peters LFC Trust Services is an offering proviced by Lee Financial Corporation, a wealth management firm committed to our clients’ security, success, and fulfillment. Our WholeVision™ process integrates financial planning, investment management and Human Capital consulting. From multi-generational planning to business consulting, we’re our client’s core advisor and trusted resource for personal, family, and business needs. A Monthly Report on Trust News and Information

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