Idaho Law Blog
Often my clients use estate planning not only as a way of transferring property to heirs but also as a tax planning tool. In doing so my clients always want to know whether there is state will be required to pay any state or federal taxes when they die. The good news is that in Idaho there is no estate tax. As a result, no taxes need to be paid to the state of Idaho once a person passes away. However there is a federal tax. this provides additional information about the federal tax.
TAXABLE ESTATES
The IRS set the limits for the amount of an estate that will be taxable. Every year for several years that amount has increased. Currently an estate will only be taxed if it’s value is greater than $5.45 million for an individual and $10.9 million for a married couple. The vast majority of people — some financial planners estimate the amount to be 99.8% of all Americans — are not affected by the federal estate tax.
This amount is actually known as the “exemption” amount that is given to each individual or couple. Without getting too complicated in this blog and individual does have the ability to give away gifts during their lifetime up to the total “exemption” amount. The bottom line is that when you die, if your estate is above these amounts, then there will be a federal estate tax that will have to be paid.
HOW THE FEDERAL ESTATE TAX WORKS
First, it is important to understand that the tax is paid by your estate before any transfers are made to your heirs. The top federal estate tax bracket is 40%. What this simply means is that before your heirs can inherit any property that’s above the exemption amount 40% of that amount may be paid to the federal government as the federal estate tax.
WHERE DO WE GO FROM HERE (2017 AND BEYOND)
The real question that clients are asking me is what’s going to happen now that Donald Trump has been elected as president. There has been some undertones that President Trump may actually do away with the estate tax altogether. There’s also talk that he may actually raise the estate tax exemption to effectively do away with the estate tax. Weather end of these things actually come to pass remains to be seen. However, you can be assured that there will be some changes to the estate tax for the year 2017 and beyond.
If you have questions about how the federal estate tax may affect your estate, we can help. Call us toll free at 877-232-6101 or 208-232-6101 for a consultation with Lane Erickson and the Racine Olson team of Estate Planning attorneys in Idaho. You can also email Lane Erickson directly at lve@racinelaw.net. We will answer your Idaho Estate Planning questions and will help you solve your Idaho Estate Planning problems.
This website includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer for advice on specific legal issues.