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States reconsidering estate taxes; will New Jersey follow?

Here in New Jersey, we levy both an estate and an inheritance tax when a person dies and leaves money over a certain amount behind to someone else. If that strikes you as a little unfair because it taxes both the estate and the beneficiary, you're not alone in that line of thinking. One estate planning professional even included New Jersey on her list of "Where Not To Die" because the tax penalties can be so high if you are not careful.

Across the country, many states are rethinking their approach to taxing estates and bequests. Indiana recently increased the amount that a person can transfer without being hit by a tax penalty and other states, including Nebraska, Oregon and Ohio, are considering seriously revamping their tax structure with respect to inheritances.

Maryland is like New Jersey in that it levies both an inheritance and an estate tax.

While we all would love it if the tax laws were changed so that fewer dollars went to the government and more went to the intended beneficiary, for now, we must work within the laws as they are written. Many people who are working on their estate plans find it worth their while to allocate a certain amount of their time with their attorney to discussing tax repercussions. An attorney who is experienced in this field may be able to advise you on how to craft your estate planning documents so that you can avoid the worst penalties, and obviously that would be a good thing.

Source: Forbes, "Another State Death Tax Kicks The Bucket, Will Others Fall?" Ashlea Ebeling, March 20, 2012

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