Kansas estate and inheritance taxes have not been assessed at the state level since 2009. This does not mean that estate taxes never have to be paid by those who live in the state of Kansas. Federal estate taxes may still be assessed.
Because estate taxes can reduce the value of an inheritance and create substantial problems for those with family businesses and farms, it is important for estate taxes to be taken into consideration as part of your estate planning.
Parman & Easterday can provide invaluable help to families focused on smart estate planning to ensure they do everything possible to reduce the amount of taxes to be paid after death.
The Rules for Kansas Estate Taxes
According to the Kansas Department of Revenue, an inheritance tax used to be required on Kansas estates, but as a result of a “sunset” provision, these inheritance taxes have not been required since July 2, 1998.
Likewise, the Kansas Department of Revenue explains that “estates of decedents dying after 2009 are not subject to the Kansas estate tax.”
Without any state inheritance or estate taxes, Kansans need only be concerned with whether they will have to pay federal estate tax or not. The federal rules require estate taxes to be paid if an estate is a relatively large one. As of 2016, an estate passes tax free if it is valued at less than $5.45 million. Only estates with a higher value will be subject to federal taxation.
Although this seems like a lot of money, it is important to realize that the value of farmland, family businesses and company assets are counted when determining how much an estate is worth.
This can be a problem for those with a lot of money tied up in land or valuable company assets who do not have a lot of liquid assets. When estate taxes come due under these circumstances, family members may have to sell farmland, company assets or the family business. This is an undesirable result because the farm or company should be a legacy for the heirs.
How to Avoid Estate Taxes
There are ways to reduce or avoid estate taxes, but it is necessary to speak with an experienced estate planning lawyer to take advantage of them. The right tax strategy to avoid Kansas estate taxes will vary depending upon the type of assets owned and the family relationships.
A straightforward way to avoid estate taxes is to take advantage of rules for married couples. Under federal law, one spouse can leave as many assets as desired to the surviving spouse without estate taxes being assessed. This means a husband can transfer as much as he wants to his wife, or vice versa.
If the first spouse to pass away does not use his or her estate tax exclusion, this can transfer as well. The ability to transfer the estate tax exclusion is important for married couples. It means the second spouse to die can pass on $10.9 million in assets without estate taxes. If a husband died first and left his entire estate to his wife, she could pass on $10.9 million ($5.45 million each for her and her husband) free of estate tax to anyone she wished. The ability to combine exclusions means married couples in Kansas can pass on a lot of money without incurring estate taxes.
This is not the answer for everyone. Some people may not want to leave all their wealth to their spouse. Or their estate may be worth more than $10.9 million. An experienced attorney can also discuss other estate planning tools to reduce your estate taxes.
Contact a Kansas Estate Planning Lawyer For Help Today
Parman & Easterday has extensive tax and estate planning experience and can help you protect your wealth from estate taxes in Kansas. Call us today at (405) 703-9987 or (913) 385-9400 or contact us online to speak with a member of our legal team and learn more.