• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
mendelson-logo

Mendelson Law Firm

Memphis TN Estate Planning & Creditors Rights Attorneys

Call Now (901) 763-2500
(866) 997-6325
Fax (901) 763-2525

Consumer Collection Matters Contact Portal
Make Payment

  • HOME
  • WHO WE ARE
    • Attorney and Staff Profiles
    • About Our Firm
  • HOW WE HELP
    • Commercial Collections & Subrogation
    • Consumer Collections & Collections Payment Portal
    • Estate Planning Services
      • Estate and Gift Tax Figures
      • Estate Planning
      • Legacy Planning
      • LGBTQ Estate Planning
      • Minor Children and Young Adult Planning
      • Pet Planning
      • Remarriage and Blended Families Protection
      • Wills and Trusts
    • Elder Law Services
      • Elder Law and Medicaid
      • Incapacity Planning and Caregiver Support
      • Trust Administration and Probate
    • Business and Financial Planning
      • Business Planning & Litigation
      • Family-Owned Businesses
      • Financial Planning Assistance
      • IRA and Retirement Planning
  • RESOURCES
    • Elder Law Reports
    • Estate Planning and Resources
      • Estate Planning Checkup
      • Estate Planning Definitions
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top 10 Estate and Legacy Planning Techniques
    • Frequently Asked Questions
      • Estate Planning Frequently Asked Questions
      • Incapacity Planning Frequently Asked Questions
      • Legacy Wealth Planning Frequently Asked Questions
      • Trust Administration and Probate Frequently Asked Questions
    • LGBTQ Resources
    • Powers of Attorney, Health Care, and Emergency Documents
    • Pre-Consultation Form
    • Special Needs Resources
    • Trust Administration and Probate Resources
      • Bereavement Resources
      • How To Know If You Need Extra Help With Your Grieving
      • Loss Of A Loved One
      • The Mourner’s Bill Of Rights
      • Things You Need To Do When A Loved One Passes Away With A Trust
      • Trust Administration and Probate Definitions
      • Things You Need To Do When A Loved One Passes Away With A Will
  • ON-DEMAND WEBINAR
  • REVIEWS
    • Estate Planning Review
    • Collections Review
    • Other Legal Matters
  • BLOG
  • CONTACT US
    • Collections
      • Contact Us
    • File a Complaint
    • Other Legal Matters

Is There a Tennessee State Estate Tax?

February 18, 2022 by Benjamin Wachtel

estate taxA lot of people have concerns about how taxes will impact the inheritances that they will be leaving to their loved ones. Generally speaking, inheritances are not subject to income taxes, but there are estate taxes that can affect high net worth individuals.

State-Level Estate Taxes

There are 12 states that have state-level estate taxes, and there is a Washington, D.C. estate tax. The majority of these states are in the northeastern part of the country, and we are in the clear here in Tennessee because there is no state-level estate tax in our state.

However, this does not necessarily mean that state-level estate taxes do not apply to you and your family. If you own property in a state that has an estate tax, it would apply to your estate, but there are exclusions.

An estate tax exclusion is the amount that can be transferred tax-free before the remainder would be subject to taxation. The lowest state-level estate tax exclusions in the country are $1 million in Massachusetts and Oregon.

In addition to Massachusetts and Oregon, these are the states that have state-level estate taxes:

  • Connecticut
  • New York
  • Vermont
  • Illinois
  • Maryland
  • Maine
  • Rhode Island
  • Minnesota
  • Hawaii
  • Washington

State-Level Inheritance Taxes

An inheritance tax is a different type of taxation. As we have stated, an estate tax is levied on the portion of an estate that exceeds the exclusion, so there is just one instance of taxation. When there is an inheritance tax in place, it can be levied on transfers to each individual inheritor.

Iowa, Kentucky, Maryland, Nebraska, Pennsylvania, and New Jersey are the only states with state-level inheritance taxes. If you were to inherit property in one of these states, the inheritance tax would apply to you unless you are exempt. Close relatives are typically exempt from inheritance taxes.

Federal Estate Tax

There is also the federal estate tax that can consume a significant portion of your estate with its 40 percent maximum rate. Strangely enough, most people would love to be exposed to this tax.

The federal estate tax exclusion is $12.06 million, so it is not a factor if you are not very wealthy. There is also a federal gift tax, so you cannot give large gifts to avoid the estate tax.

If you are married, you can use the unlimited marital deduction to transfer any amount of property to your spouse free of taxation. A surviving spouse can add their deceased spouse’s exclusion to their own because the estate tax exclusion is portable.

People that are exposed to estate taxes can implement tax efficiency strategies, and this will often include the utilization of irrevocable trusts. Grantor retained annuity trusts, generation-skipping trusts, qualified personal residence trusts, and charitable lead trusts are some of the trusts that are used for this purpose.

Income Taxes

We touched upon the fact that in most cases, the inheritors do not have to pay federal and state income taxes on inheritances. However, there are a couple of exceptions.

Distributions of the principal in a trust are not subject to income taxes, but you would be required to report distributions of the trust’s earnings. If you are the beneficiary of a traditional individual retirement account, the distributions would be taxable.

Capital Gains Tax

Inherited appreciated assets get a stepped-up basis. This means that the inheritor would not be required to pay capital gains taxes on the appreciation that accumulated during the life of the decedent.

We Are Here to Help!

Our firm can help if you have estate tax concerns, and if you do not, we can work with you to develop a custom crafted plan that is ideal for you and your family.

You can schedule a consultation at our Memphis, TN estate planning office if you call us at 901-763-2500 or 866-977-6325. If you would rather reach out electronically, send us a message and will get back in touch with you promptly.

 

  • Author
  • Recent Posts
Benjamin Wachtel
Benjamin Wachtel
A fourth generation Memphian, Benjamin Wachtel earned his JD from the University of Memphis, Cecil C. Humphries School of Law when he was twenty-three – the youngest member of his graduating class.

At Mendelson Law Firm, Mr. Wachtel focuses on Litigation (Business Litigation, Insurance Defense, Commercial Collections, Subrogation, Landlord/Tenant, Automobile Litigation, etc.), Probate and Estate Planning (Wills, Estates, Trusts, Powers of Attorney).
Benjamin Wachtel
Latest posts by Benjamin Wachtel (see all)
  • 5 Things You Should Know About a Simple Will - March 29, 2023
  • These Unusual Trusts Fly Under the Radar - March 20, 2023
  • Are Assets In a Trust Available to You? - February 20, 2023

About Benjamin Wachtel

A fourth generation Memphian, Benjamin Wachtel earned his JD from the University of Memphis, Cecil C. Humphries School of Law when he was twenty-three – the youngest member of his graduating class.

At Mendelson Law Firm, Mr. Wachtel focuses on Litigation (Business Litigation, Insurance Defense, Commercial Collections, Subrogation, Landlord/Tenant, Automobile Litigation, etc.), Probate and Estate Planning (Wills, Estates, Trusts, Powers of Attorney).

Primary Sidebar

Blog Subscription

Texting Permission

SUBSCRIBE TO OUR E-NEWSLETTER

WHERE WE ARE

MENDELSON LAW FIRM
799 Estate Place
Memphis, Tennessee 38120
Phone: (901) 763-2500
Fax: (901) 763-2525

Toll-Free: (866) 997-6325

OFFICE HOURS

Monday8:00 AM - 5:00 PM
Tuesday8:00 AM - 5:00 PM
Wednesday8:00 AM - 5:00 PM
Thursday8:00 AM - 5:00 PM
Friday8:00 AM - 5:00 PM

MAP/LOCATION

map

Footer

footer-logo

Mendelson Law Firm is a debt collector. This is an attempt to collect a debt. Any information obtained will be used for that purpose.

ATTORNEY ADVERTISEMENT

THIS IS AN ADVERTISMENT. Our firm reviews and updates this site periodically. However, there may be times when the information on our site is not current. The information provided on this site for informational purposes only and is not intended to be legal advice. If you wish to retain our firm to seek legal advice or representing you must enter into a client relationship by both parties entering into a written agreement. A lawyer client relationship is not created by communication or email through this web site. This is an attempt to collect a debt by a debt collector and any information obtained will be used for that purpose.

  • Privacy Policy
  • Terms Of Service
  • Disclaimer
  • Site Map
  • Powered By American Academy of Estate Planning Attorneys
© 2023 Mendelson Firm, PLLC, All Rights Reserved