Estate Taxes in New Orleans

Louisiana has a reputation for being one of the most tax-friendly states for retirees, it is also one of the majority of U.S. states that currently does not collect an estate tax at the state level. However, ten years ago, it was a different story. Louisiana imposes an estate transfer tax and an inheritance tax on deaths that occurred on or before June 30, 2004.

The good news is that the Louisiana inheritance tax was repealed effective July 1, 2008. However, those individuals who inherited property prior to the tax's repeal and did not file an inheritance tax return may be subject to taxes and any penalties that have accrued.

All Louisiana estates that are subject to the federal estate tax under the U.S. Internal Revenue Code are required to file a Louisiana Estate Transfer Tax Return. However, no state estate tax is imposed because of the phase out of the federal estate tax credit.

For deaths occurring prior to June 30, 2004, Louisiana collects a separate estate tax at the state level, this was called a "pick up tax" or a "sponge tax," which was equal to a portion of the overall federal estate tax bill. The "pick up tax" that was collected was based on the state estate tax credit that was allowed by the IRS on the federal estate tax return, IRS Form 706. Essentially, the overall tax bills wasn't increased because of this pick up tax, instead the total bill was apportioned between the IRS and the state taxing authority.

In conclusion, for deaths occurring after June 30, 2004, Louisiana currently does not collect a state inheritance tax, which is a tax assessed against the share received by the individual beneficiary, nor does it collect a state estate tax. Since these taxes are inapplicable to most estates, it's the federal estate tax that receives more attention.

As of 2014, the federal estate tax exemption is $5.34 million. Those states that exceed the federal estate tax exemption are subject to a 40% tax as of 2013. Since the majority of Louisiana estates are valued below the $5.34 million threshold, only those with large estates will have to worry about it. If you do have a large estate, it is very important to meet with an attorney to discuss advanced estate planning strategies that can reduce the size of your taxable estate.

Have more questions about estate and inheritance taxes and tax planning? Contact a New Orleans estate planning & successions attorney from Brown Weimer LLC at (504) 662-1798 to arrange a free consultation!

Brown Weimer LLC Attorneys and Counselors at Law - New Orleans Probate Attorney
Located at 400 Poydras Street, Suite #1125
New Orleans, LA 70130
Phone: (504) 561-8700

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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