A new year brings new taxes. Fortunately for Tennesseans, in the area of estate tax, this means less taxes for 2015.
To give a brief review of 2014 estate taxes, an estate could be worth $2,000,000.00 and not be taxed by the state of Tennessee. Federally, an estate could be worth $5,340,000.00 and not be taxed by the federal government. Although many estates clearly would not have been taxed in 2014, even fewer will be taxed in 2015.
As of January 1, 2015, in Tennessee, an estate can now be worth $5,000,000.00 and not be taxed. The federal maximum for a tax-free estate has also increased; it is now $5,430,000.00. Even better news is that in 2016, Tennessee will cease having an estate tax. This creates a desirable environment for those entertaining the idea of Tennessee as a location in which to retire.
Although these numbers seems unattainably high to most Tennesseans, these amounts are the finale to a long road of decreasing estate taxes. In 1999, for example, an estate over $650,000.00 was taxed in Tennessee. A plan was subsequently put in place to slowly phase out the estate tax, with 2015 being the final year. The federal government has not given any indication that it intends to demolish its estate tax, however, the maximum is set to increase for inflation. We can only hope that our state and federal government continue these trends.
If you are asking "My assets are nowhere near $5,000,000.00 so why do I need any help with planning my estate?" - I will answer that question next week!