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Estate and Trust Law

The law of estates and wills is another basic area in which the 50 states differ. If you die intestate (“without a will”) your property is divided according to the laws of the state in which you live, no matter what your actual wishes might be. You must write a valid will and have it witnessed and signed in a specified manner in order to make your own wishes legally valid. How you do this varies state to state.

Even if a will is valid, state law and custom will affect the interpretation of the will in the case of an ambiguity or a dispute. Necessary language differs state to state.

The federal government collects a tax on estates (popularly called the “death tax”), subject to a complicated set of exemptions and rules. About 20 of the American states in addition collect their own estate taxes. These taxes are paid by the estate, not the people who inherit the property. To confuse matters further, a few states collect “inheritance tax,” paid by those inheriting the property. To prevent people from avoiding taxes on their estates by giving away their property before they die, the federal government assesses a gift tax. A handful of states do the same.

For high income individuals, many options are available, on both state and federal levels, to reduce or minimize these taxes, but specialized legal and accounting help is usually necessary.

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