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With all of the focus on federal estate taxes and well, the fact that currently there isn’t one, before celebrating and canceling your life insurance, those with large estates might want to check and see how hard your state might bite into your estate through state death taxes.

While not as pervasive as FEDERAL, a number of states have death taxes. They come in all shapes and sizes but none of them are a good deal to your estate and in spite of the current tenuous moratorium on the federal tax, the state death taxes are not taking a break. In fact I would, considering the state of most states, be hard pressed to believe that they won’t move to fill the void left by the feds by either implementing a tax if they don’t have one or raising it if they do have one.

I ran into this double jeopardy issue with a client a few years ago in the state of Washington where they have the distinguished position of being the state with the highest death tax at 19%. And their estate exemption of only $2mm is a far cry below what the federal exemption was, $3.5mm or what it might be when it resurfaces, $5mm.

Bottom line. The absence of a federal estate tax, as temporary as it may or may not be, should not be any kind of a signal to quit estate management and planning. If the feds decide to get along without it