Many people here in Louisiana want to protect as much of their assets as possible to pass down to future generations. However, one aspect of estate planning that many do not think about initially is how taxes on one’s estate will affect the final outcome. The following discusses estate tax laws for the Bayou State as well as federal tax laws for tax planning purposes.
First of all, many readers will be relieved to learn that Louisiana is one of 38 states that do not impose an estate tax. This tax, sometimes referred to as a death tax, is levied against an estate after the estate owner passes away but before any of the estate’s assets are distributed. Although the state does not levy a tax on estates, the federal government will, as long as the estate surpasses a certain threshold. Currently, the federal estate tax exemptions are $11.18 million for an individual estate or $22.36 million for a married couple. Any amount above that threshold will incur federal estate taxes up to a maximum rate of 40%.
Two other forms of taxes people usually need to consider with their estates are inheritance taxes and gift taxes. Again, Louisiana does not impose an inheritance tax; however, the inheritor may have to pay a tax if his or her benefactor lived in a state that does impose inheritance taxes. Likewise, Louisiana does not levy a gift tax, but the federal government has set thresholds for the amount one can give to another tax free during a calendar year. Anything above $15,000 must be reported to the IRS.
Considering the vast majority of people will not exceed the federal thresholds for estate taxes in Louisiana, it may seem like most people will not have to worry about the issue at all. However, estate planning and tax planning are complicated, and the laws governing them change frequently. As such, it would behoove an estate owner to consult with an experienced estate planning attorney, along with a trusted financial adviser, to review all of one’s estate planning goals and ensure everything is in order so there will be no surprises for a benefactor’s heirs and loved ones.