If you want to ensure your loved ones’ financial security after you pass, it’s important to consider how the death tax might affect them. “Death tax” is a colloquial term that people use when talking about estate and/or inheritance taxes. Here, the estate planning team at Ng & Niebling in Honolulu explains what you need to know about such taxes in Hawaii. 

The Estate Tax 

The estate tax is essentially a tax on property that is transferred to others upon your death. Although it can be imposed at the state level, only 14 states do so. Hawaii is one of them, but the exemption is relatively high.

Residents who die in 2018 may leave up to $11.2 million to their loved ones without imposing an estate tax burden on them. If the total value of your estate exceeds this exemption, which is the same as the federal exemption for 2018, beneficiaries will have to file both a state and federal return, which will determine precisely how much they owe to each governing body. 

The Inheritance Tax

Unlike the estate tax, the inheritance tax does not apply at the federal level. Additionally, only six states impose one, and Hawaii is not one of them. If you happen to own property in one of the states that has an inheritance tax, though, it could affect your beneficiaries. An estate planning attorney can review your situation to confirm, but beneficiaries would likely have to pay the state where the property is located a percentage of the total value of their inheritance. 

If you want to learn more about protecting family members in all eventualities, turn to an estate planning lawyer at Ng & Niebling. Located in Honolulu, this firm has been helping Oahu residents create comprehensive estate plans for more than four decades. Whether you’re interested in avoiding probate or reducing the death tax burden, you can rely on them for quality counsel every step of the way. To request an estate planning consultation, visit their website or call (808) 732-7788.