STATE DE-COUPLING

Jon E. Dougherty, NewsMax.com
Thursday, Apr. 15, 2004

"In most states, estate and inheritance taxes are designed in such a way that states will face either a full or partial loss of estate tax revenues as this credit is phased out," she writes, noting the federal estate tax legislation repeals over four years (instead of 10) the federal estate tax credit to which state estate taxes are tied

In other words, the estate tax may be fading on the federal level but not in states that have chosen to de-couple.

Seventeen states and the District of Columbia are currently de-coupled, says the CBPP: Kansas, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New York, North Carolina, Ohio, Oregon, Rhode Island, Vermont, Virginia, Washington, Wisconsin.

"Illinois, Maryland, Massachusetts, New Jersey, North Carolina, Rhode Island, and Vermont enacted legislation linking their estate taxes to the federal estate tax as in effect before the 2001 tax bill," writes McNichol. "Minnesota, which passes a tax conformity package each year, explicitly elected not to change its estate tax to conform to the federal changes.

Maine has elected to decouple at least through 2004, and Wisconsin has decoupled through 2008. Nebraska decoupled by creating a separate state estate tax on estates that exceed $1 million based on the federal law before the 2001 changes."

The Worst States

Other states' legislatures have enacted exemption limits, but if your net worth surpasses them, your estate will be hit with hefty inheritance or "gift" taxes upon your death. According to Forbes Magazine, they are: