Many of our regular Brevard County legal blog readers know that Florida does not have an estate tax. For some residents (especially those who have significant assets), that tax’s absence is one of the reasons they moved to the Sunshine State, or why they never moved away.
A recent Forbes article is likely to reinforce estate-tax-related affections. The publication pointed out that those who were on the Forbes 400 list back in 2001 had by 2017 saved $80.7 billion by moving to states that do not have state estate taxes.
That’s an estimate in a recent National Bureau of Economics paper, but researchers had a surprise, too: states can bring in more in so-called death taxes than they lose income taxes from the super-rich who flee the state. Forbes notes that the research bolsters calls for state-level estate taxes in places such as Florida, that do not currently impose estate taxes.
It should be noted that states who impose death taxes do so separately from the federal estate tax. This year, the federal estate tax will generally apply when an individual’s assets exceed $11.4 million at the time of death. The estate tax rate can be as high as 40 percent.
It’s no surprise that billionaires tend to leave places with state-level estate taxes, preferring one of the 17 states (and Washington DC) that do not impose a death tax.
The authors of the paper found that from 2001 to 2010, 21 percent of billionaires had moved from estate-tax locales to states with no estate taxes. Only 1 percent had gone from no-tax to states with the death tax.
It makes us wonder if that 1 percent ever spoke to a knowledgeable estate planning attorney before making those very expensive moves.