By: Martin M. Shenkman, CPA, MBA, JD

• State estate tax planning will remain important for many taxpayers. State estate tax rates were often not the focus of planning primarily because the federal estate tax planning generally reduced state estate tax costs as well. Without the federal estate tax, many estates under the new $5 million threshold will still face hundreds of thousands of dollars in state estate tax. While those figures won’t justify the complex and costly plans that a $2 million federal estate tax exclusion and 45 percent rate might have justified several years ago, they do warrant some planning. Many states “decoupled” from the federal estate tax system and enacted their own estate tax laws, often with a lower exclusion than the federal estate tax exclusion. More states may react to the high $5 million exclusion and change state estate tax laws. See "decoupling."

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