Estate taxes in 2015 will affect fewer people than in previous years. The reason? The federal estate tax limit was raised to $5,430,000, up from $5,320,000 in 2014, $5,250,000 in 2013, $5,150,000 in 2012, $3,500,000 in 2009 and up from $675,000 back in 2000. Beyond 2015, there is no certainty.
First, Arizona does not have its own estate tax. Some states do but if you are a resident of Arizona with assets owned only in Arizona, the only estate taxes your estate will likely encounter are federal estate taxes.
Amounts over the $5,430,000 are subject to potentially a 40% tax but any amounts under that limit are not taxed.
If your estate is subject to estate taxes, taxes are typically due within nine (9) months of the last spouse's passing. There are many types of trusts that can be used to help reduce estate taxes, such as charitable trusts, generation skipping trusts and irrevocable life insurance trusts.
If you are married, estate taxes are not due until after the death of the surviving spouse. With the recent estate tax law changes, estate taxes are also now portable - each spouse can claim the $5,430,000 exemption for a total of $10,000,000. In previous years, couples needed a trust to double their exemption. However, we do not know what the laws will be in the future. Hence, we still prepare trusts with language allowing couples to each receive an exemption should the law be reversed in future legislation.