15 May Repeal of Indiana’s Inheritance Tax
By Kathy Blomeke
On May 8, 2013, the repeal of Indiana’s inheritance tax was signed into law by Governor Mike Pence. It is backdated to take effect on January 1, 2013. Prior to the repeal, the inheritance tax was being phased out over a ten year period.
In a nutshell, for taxpayers who died after December 31, 2012, no inheritance tax returns have to be prepared or filed and no tax has to be paid. Not only will tax dollars be saved, but also the administrative expense in preparing the return will be saved.
The repeal will help farm families who own valuable land and all others with substantial net worth. For example, if two siblings inherit a $4 million estate from their father who dies in 2012, the Indiana inheritance tax would be about $235,000. In that same scenario, except the father dies in 2013, there would be no inheritance tax.
The repeal of the Indiana inheritance tax does not affect the federal estate tax. The federal estate tax still exists, but currently the amount exempt from federal taxation is $5.43 million per person.
Do not let the repeal of the inheritance tax keep you from updating your estate plan.
Keep in mind that estate planning is not just for minimizing estate taxes at death; planning is also to insure that your property passes according to your wishes at death. If you have questions about your estate plan and the current estate tax laws, we encourage you to give us a call.