The retroactive repeal of the Indiana inheritance tax is perhaps the biggest story circulating throughout the estate planning community here in the state of Indiana at the present time. Inheritances are no longer subject to a state inheritance tax if the decedent passed away after December 31st of 2012.
An inheritance tax is potentially levied on each person who is receiving an inheritance. An estate tax is levied on the estate as a whole before inheritances are distributed.
This does not mean that Indiana residents are no longer subject to any type of death tax. There is a federal estate tax in place, and it carries a 40% maximum rate and a $5.25 million exclusion in 2013.
There is now one less estate planning challenge to contend with, but there are many concerns that still remain.
The Indiana Lawyer recently did a story on the subject, and our own Paul Kraft was called upon to provide some insight.
“Hopefully clients won’t be lulled into a false sense of security now that the Indiana inheritance tax is gone. Death-tax reduction was one of many reasons to do estate planning. There are many, many other reasons people need to realize it’s important to do estate planning,” said Kraft.
He specifically talked about the importance of having assets valued at the time of death to mitigate capital gains tax exposure.