By: Daniel J. Phillips
It is a question that many of us have wondered about: will I have to pay estate taxes? The question can arise after the death of a friend or family member, or in the course of your own estate planning.
Fortunately for most estates in Louisiana, the answer may be no. The State of Louisiana has eliminated estate taxes, so estates in Louisiana are no longer required to pay state estate taxes. On the other hand, the federal government still requires the payment of estate taxes, but only for “Taxable Estates” whose gross value exceeds the amount of the IRS’ exemption. The amount of this exemption changes annually: for estates of persons who died in 2014, the exemption amount was $5.34 million; for 2015, the exemption amount has been increased to $5.43 million.
According to the IRS, the “Taxable Estate” is the amount of a “Gross Estate,” less any applicable deductions. The gross estate includes all property in which the decedent, or person who passed away, has an interest, including the values of certain items such as annuities, donations which the decedent made prior to his death, and certain life insurance proceeds even if these proceeds are not payable to the estate. Any applicable deductions are then subtracted from the amount of the gross estate, such as the amount of debts such as mortgages, estate administration expenses, and property that passes to qualified charities. If the value of the Taxable Estate is less than the exemption amount for the year in which the decedent died, the estate may not be required to pay federal estate taxes.
Please note that this is only a brief synopsis of whether an estate tax must be paid, and is intended for informational purposes, not as legal advice. If you have had a loved one recently pass away, or you are concerned about your estate’s future exposure to estate taxes upon your death, our attorneys may be able to help you navigate the succession process or plan your estate.