The former vice president of Hibernia Bank, Sue Ann Ma now serves as the president of Seminal Financial Group, Inc. A certified public accountant, Sue Ann Ma offers her clients various financial services including estate planning.
Estate taxes can be costly. There are essentially two types: federal estate taxes and state estate taxes.
If you live in Texas, you need not worry about state estate taxes because the state does not levy the tax on inheritances. However, you may have to pay the tax if you inherit property from a relative who lived in a state that levies estate tax.
Texas residents are eligible to pay federal estate taxes if they leave behind property worth more than the federal estate tax threshold, which currently stands at $5.4 million. The threshold adjusts with inflation, so it may change from time to time. A person who passes away and leaves behind an estate worth more than the threshold will pay federal estate taxes from the estate. Levied at 35% of everything above the threshold and payable in cash, the tax is very costly. Thankfully, estate planning helps people reduce their estate tax burden, ensuring their spouses, children, and other relatives inherit as much as they deserve.