In addition to a federal estate tax, most people can plan to pay an estate tax for their state of residence as well upon the distribution of a deceased loved one’s estate. These gift and estate taxes generate a significant amount of revenue for most states; but according to this recent article in Forbes, some states are finding that in spite of the revenue it generates, gift and estate taxes have actually become a financial liability. In fact, the state of Tennessee recently enacted legislation which would phase out their estate tax over the course of four years.
The reason for this is simple; studies have shown that “Tennessee’s gift and estate tax is the single greatest reason why wealthy people don’t want to live in Tennessee. Many leave the state and few move into Tennessee. They take all their jobs, entrepreneurship, spending, homes and wealth with them. This is the single greatest detriment to Tennessee’s growth and Tennessee’s ability to raise sufficient tax revenues.”
Tennessee isn’t the only state making these kinds of legislative changes; another Forbes article reveals that “Ohio legislators in both the House and the Senate have voted to repeal the state estate tax as of Jan. 1, 2013.” News sources are actually rife with evidence that many other states have either already enacted legislation repealing estate taxes, or are considering a repeal of what many residents now consider an unfriendly tax.
If you’re wondering just how tax friendly or unfriendly your own state is, you can find an interactive state-by-state map on the Forbes website here. Or an even better way to learn more about your options regarding gift and estate tax strategies is to contact our office today.