After spending a lifetime of earning, saving and investing — and paying income and capital gains taxes all the way along — you may wonder why our government feels entitled to tax the value of what’s left when you die. However, the IRS and the State of Hawai‘i both want a piece of your estate.
As of 2021, each US citizen residing in Hawai‘i is allowed to pass on $5.49 million free of state estate tax and $11.7 million free of federal estate tax. I call these “coupon” amounts, because it is as if the government gives each of us a coupon to shelter our assets from estate tax. At the current coupon amounts, most of us do not have to worry about the government reaching into our family cookie jar when we die. But, major changes to the coupon amounts may be around the corner.
Congress is talking about cutting the federal coupon approximately in half and Hawai‘i has been talking about reducing its coupon to $1 million. So there could be tax payable at your death if you own a house and have modest amounts of cash, life insurance, and retirement savings.
Don’t wait until the law changes before you call your estate planning advisors to talk about how to address these possible changes. There may be things you can do to minimize the tax bite and maximize what you leave your family.
SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.
www.est8planning.com
808-587-8227 | maku@est8planning.com
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