The Indiana Senate and House of Representatives recently voted to repeal, in its entirety, the Indiana inheritance tax (AKA state death tax) by the year 2022. If signed by Governor Mitch Daniels, the legislation will also gradually reduce this tax over the next 10 years, leading to a complete repeal.
Previously, the first $100,000 left at death to each Class A beneficiary (children, grandchildren, parents, etc.) was received free of this tax. If an individual with a $1 Million estate had 4 children receiving an equal portion of the estate, only $600,000 would be subject to the Indiana inheritance tax ($1 Million minus the $100,000 exemption for each of the 4 children). If the bill becomes law, this exemption will increase to $250,000 per Class A beneficiary starting this year. Thus, the $1 Million estate described above would be free of Indiana inheritance tax.
This is a significant development in the wealth and estate planning arena, and our wealth planning team continues to monitor details of such activities to evaluate the impact on our clients’ personal wealth plans.