How Much are Death Taxes?

Yee Law Group Inc. > How Much are Death Taxes?

Sacramento Trust Lawyer

Sacramento Trust Lawyer

As the old saying goes, death and taxes are the only sure things in this world. With regard to death taxes, i.e., estate taxes, both of these certainties occur at the same time.

As a Sacramento trust lawyer from a firm like Yee Law Group Inc. can explain, currently, all estates having a value of over $11.7 million pay a federal estate tax of from 18% to 40% depending on the amount of the threshold overage. This $11.7 million exemption is set to fall to $5 million in 2026 unless Congress decides something different.

State Death Taxes

In addition to the federal estate tax, the following states and the District of Columbia impose their own death taxes:

  • Connecticut
  • Hawaii
  • Illinois
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • New York
  • Oregon
  • Rhode Island
  • Vermont
  • Washington

The exclusion amounts in these states currently range from a low of $1 million to a high of $5.74 million.

Reducing or Avoiding Estate Taxes

A well thought out estate plan, spearheaded by an experienced local estate planning lawyer, can help you reduce your estate taxes or even avoid them entirely. Some possibilities include the following:

  • Giving some of your assets away while you’re still alive
  • Placing some of them in one or more irrevocable trusts
  • Placing some of them in a charitable trust
  • Simply spending a lot of your money for your own enjoyment while you’re still alive

Making Gifts

Keep in mind that with regard to gifts, you can currently give up to $15,000 per year to as many people or entities as you wish without having to pay a federal gift tax. If you and your spouse make joint gifts, the exclusion increases to $30,000.

Unfortunately, there’s a lifetime federal gift tax exemption, but it’s a large one: currently $11.7 million for an individual and $23.4 million for a married couple. Similar to the federal estate tax, these exemption amounts will decrease to $6 million and $12 million respectively in 2026 unless Congress decides differently.

Only Connecticut and Minnesota impose their own state gift taxes.

Putting It All Together

As you might expect, setting up and implementing an effective estate plan can quickly become quite complicated depending on the extensiveness of your assets and what you wish to do with them. This is where an experienced local trust planning lawyer can be your best friend. He or she can explain the various taxes and other consequences involved and then help you construct a personalized, comprehensive estate plan that achieves your goals and objectives to the greatest extent possible – while protecting your beneficiaries from death taxes, too.