Inheritance Tax Tips

There are of two types of death taxes: inheritance taxes and estate taxes. Inheritance taxes are paid by your heirs, not by your estate. See our chart on what states have an inheritance & estate tax. Your estate must pay this tax no matter who your beneficiaries are. After reviewing our chart, you will see that most state have eliminated these taxes or reclassified them as etsate tax.

If your state imposes death taxes, there are several things you can do.

If you live near a state border, or are domiciled in two states, make your residence in the state with lower, or no, inheritance taxes
Avoid simple wills as they do not reduce your estate
Consider gifting to reduce the size of your estate
Carry a second to die policy if married, that will pay that can offset the inheritance tax
Make sure all insurance is owned by an irrevocable insurance trust