When seniors plan for their future and legacy, numerous issues must be addressed – from will and trusts to retirement tax planning. Another issue that needs prompt attention is estate tax planning. 

As you plan for your retirement and the protection of your family, you should understand what taxes apply (or don’t apply) to your estate, impacting your assets’ value.

Keep reading to learn more about estate tax planning in Louisiana.

estate tax planning

Louisiana Estate Tax

The Bayou State does not have an estate tax (sometimes referred to as a “death tax”), keeping good company with 38 other states that do not have an estate tax. However, Louisiana residents may have to pay federal estate tax if their estates are large enough.

We address federal estate tax below.

But don’t confuse an estate tax with an inheritance tax.  Estate taxes are levied against the estate after you die before your assets are passed down to your heirs.  This tax must be paid by the estate. 

So, what is inheritance tax?

Louisiana Inheritance Tax

An inheritance tax is a tax that your heirs pay when they receive assets from your estate. Unlike estate taxes, the beneficiary of the assets pay the tax, not your estate.

Like 44 other states, Louisiana does not have an inheritance tax. However, if your heirs live in one of the six states with an inheritance tax, then they may need to pay an inheritance tax on any assets received from your Louisiana estate – even though they don’t live in Louisiana. 

Because inheritance laws can be complicated, it’s best to connect with an experienced Louisiana estate tax planning attorney to plan for your assets and family. 

Louisiana Gift Tax

Louisiana also does not have a gift tax, which is a tax on the transfer of property to someone while receiving nothing in return. However, there is a federal gift tax exemption of $16,000 (2022) and $17,000 (2023). 

This means that you can give up to $16,000 in 2022 or $17,000 in 2023 to another person without being taxed. However, if you give more than $16,000 in 2022 or $17,000 in 2023, you’ll need to report that excess amount to the IRS. 

Additionally, this excess gift amount counts against your lifetime gift tax exemption, which is $12.06 million (2022) and $12.92 million (2023).  These gift tax exemptions are doubled for married couples.

Federal Estate Tax

Although Louisiana doesn’t charge estate tax, the federal government may, depending upon the size of your estate. Federal estate taxes apply if your estate is worth more than $12.06 million (2022) and $12.92 million (2023).  These federal estate tax exemptions are doubled for married couples.

This means that a married couple can protect up to $24.12 million (2022) and $25.84 million (2023) from federal estate taxes when both spouses die.

However, if your estate exceeds these limits, then you must pay federal estate taxes.  Federal estate taxes are progressive, with the top rate hitting 40%.

Why Retain Losavio & DeJean, LLC?

In addition to preserving your wealth and protecting your businesses and estates, there are steps you can take to ensure that you are protected as well. For example, planning for powers of attorney, Medicaid, disability benefits, and probate can ensure that if the unexpected happens, you and your family are taken care of.

At Losavio & DeJean, LLC, we provide clients with specialized, experienced, compassionate attorneys, and we have deep knowledge and experience in elder law. 

Contact us today to learn more.