Attorney Thomas B. Burton answers the following question: "Does Wisconsin Have an Inheritance Tax?" Attorney Burton discusses how the inheritance tax works in the United States and discusses how the Wisconsin tax system interacts with the federal estate and gift tax system.
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Hello, I'm Attorney Thomas Burton. I'm an estate planning and asset protection attorney here in Wisconsin. And today's question is the following:
“Does Wisconsin have an inheritance tax?”
This is an excellent question and one that comes up quite often and the good news is, Wisconsin has no state estate tax, meaning, if you die in the State of Wisconsin, the State of Wisconsin does not impose its own estate tax on your assets, after you die. That is not true in every US state. In fact, our neighbors to the west, Minnesota, they do have state estate tax and that tax is lower than the federal estate tax limit.
So in Wisconsin, we only have the federal estate tax meaning there's no separate state estate tax. It's only if your estate is large enough to be taxed by the federal estate and gift tax, and currently the federal estate tax exemption $11.58 million per person, in the state, in the United States.
Okay, so that's no matter what state you live in, for the federal estate and gift tax. So that exemption historically was quite much lower in the 90s. It was around a million now but now, it’s much higher. And if you're married couple, you can each have up to $11.58 million before a federal estate tax would be imposed.
So if you live in Wisconsin and you’re below that limit, you do not have to worry about a federal or state estate tax. In fact, Wisconsin has no state estate tax at all. So that's very good news for residents of Wisconsin. Now a note on the federal estate tax as I said that exemption level is historically quite high. Now congress could change it in the future. So if you have an estate, that's a few million dollars, maybe not the 11 yet, but it could get there, you should talk with your attorney about planning inside your trust for the possibility that the estate tax may be lower in the future.
Now, no one knows what the future holds but make you attorney aware of the size of your estate, so that they are aware that this might be something on the horizon for you. And that's what I do with client at my office, I make them aware of the levels. A lot of my clients do not have to worry about the federal state tax currently, but if they're getting into that middle area, we can do extra things inside the trust to build in-flexibility, just in case, that limit lowers in the future and because congress is looking for tax revenue, you never can be quite sure when something like that might happen. So it's wise to build in flexibility and that's why at my office, we favor using trust planning with lots of flexibility to adapt to your life and the changing tax landscape going forward.
But currently Wisconsin has no inheritance tax. It's a great reason to live in the state of Wisconsin and even spend your final days in the state of Wisconsin. Florida is a well-known state with no estate tax as well. But you don't have to go to Florida to avoid the state estate tax. You can do it right here in Wisconsin.
So great question and thank you for asking.
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