Ian’s Legal Fact of the Week 4/15/13: Estate and Inheritance Taxes

An estate tax is levied before an estate is distributed to heirs, while an inheritance tax is levied against the beneficiaries after it is distributed. The federal government recently raised the estate tax exemption to $5.25 million, but 21 states also have an estate tax — and the exemption amount is typically much lower (such as $675,000 in Rhode Island, and $1M in New York). Eight states levy an inheritance tax instead, while Maryland and New Jersey impose both estate and inheritance taxes. Many retirees move to states that have neither of these taxes, such as Florida, Arizona and Texas.

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