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Leiha Macauley, head of Day Pitney's Boston office and member of the Individual Clients department, discussed how best to deal with state estate taxes in a January 4 New York Times article, "The End of a Decade of Uncertainty Over Gift and Estate Taxes." At the start of this year the federal estate tax exemptions were set to $5 million with a 40 percent tax rate above that amount. The exemption has been indexed for inflation. Although this allows estate planning with more certainty, many states have their own estate taxes which must also be considered. In the article Leiha says that trusts can be made to preserve the exemption level of each spouse's state, potentially ensuring a lower tax rate if one spouse dies. She also notes that in coming years another gift exemption, the annual exclusion, is "going to be $30,000 per couple, and you can give that amount to anyone you want."
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