Vermonters have two estate tax liabilities. The Vermont estate tax applies on estates over $ 2.75 million, substantially less than the federal estate tax floor of $5.25 million for 2013. This applies to your net estate which is the gross estate minus allowable deductions. Your gross estate includes real and personal properties, annuities, stocks, bonds and other securities, cash and the value of any business interests.
Allowable deductions include any charitable contributions and gifts to a surviving spouse. Funeral expenses and the costs of administering your estate are also deducted from the gross. This can include lawyers, tax preparers and any appraisal costs associated with the estate. Also losses incurred during the administration of the estate are deductible. For example, you hold a stock which losses value for any reason, you may deduct that loss.
The current tax rate for those liable for Vermont estate taxes is now set at a maximum of 16%. This is below the federal rate of 40%. If this is not a concern for you currently, your estate will most likely grow during your lifetime. Estate taxes are not set in stone, and changes are always possible.
Careful planning now can help limit your estate’s potential liability in the future. More importantly, planning your estate gives you the control over who will receive your assets when you are gone. It can change as your needs and priorities change and allow you to adapt to any changes in the laws.
Stephen Unsworth
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