A Holiday-Season Guide to Understanding Estate and Inheritance Death Taxes
As the holiday season arrives, families travel, gather around busy tables, and spend more time thinking about the people they love. This time of year also brings a noticeable rise in deaths nationwide. As sad as that is, medical researchers consistently note a winter “uptick” in mortality. This includes a spike from Thanksgiving through New Year’s. While we don’t dwell on sad statistics during a season that celebrates gratitude, the pattern offers an important reminder. Life can change quickly, and strong estate planning provides clarity and support for the family members who carry responsibilities forward. In this post, we examine a related estate planning event, death taxes.
Death Taxes: What You Need to Know
This month, we turn to a topic many people overlook until it affects them directly: state death taxes, a category that includes both state-level estate taxes and inheritance taxes. These taxes function differently from the federal estate tax and misunderstanding them can create expensive surprises.
Holiday gatherings often spark conversations about family property, inheritances, or long-term plans. This guide helps you enter those conversations with confidence and gives you the knowledge to protect your estate under both federal and state law.
Federal Estate Taxes vs. State Death Taxes
The federal government charges an estate tax based on the total value of everything you own at death. Your estate—rather than your heirs—pays that tax. The federal exemption currently shelters most families, but the rules change frequently, and upcoming legislative shifts may dramatically reduce the exemption in 2026.
Some states impose their own death taxes on top of the federal system. Two types exist:
1. State Estate Tax – charged to the estate itself, similar to the federal estate tax. 2. State Inheritance Tax – charged to the person who receives the inheritance.
A few states impose one or the other, and one state—Maryland—imposes both. These taxes affect how much ultimately reaches your beneficiaries and should shape your larger estate planning strategy.
Which States Currently Collect Death Taxes?
As of 2025, the following states collect a state-level estate tax:
Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington.
The following states collect a state-level inheritance tax:
Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
So, in California, where both offices of Skvarna Law are located, the state does not collect death taxes. Because tax laws shift, and legislatures frequently adjust exemptions and rates, you need up-to-date guidance from a qualified estate planning attorney when determining your exposure.
When Do State Death Taxes Apply?
States use different rules, but a few principles appear consistently. Most states tax an estate when:
• The deceased person lived in that state, or • The deceased person owned real estate or tangible personal property located in that state, even if they lived elsewhere.
This second rule surprises people, especially retirees who live in one state but hold a vacation home in another.
Each state sets its own exemption amount, its own tax brackets, and its own list of allowable deductions. The result: two estates with the same value may face dramatically different tax consequences depending on the state involved.
Examples That Clarify How State Death Taxes Work
Below are scenarios that illustrate how residency, property ownership, and inheritance interact with state death tax obligations.
1. A Loved One Who Lived in New York Passes Away If your uncle lived in New York at the time of his death and left you his estate, New York’s estate tax rules apply. The estate may owe New York estate taxes depending on its value and the available exemptions.
However, New York does not impose an inheritance tax, so you, as the beneficiary, would not pay a separate tax.
2. A Loved One Who Lived in a No-Tax State Dies If that same uncle lived in Florida—a state without an estate or inheritance tax—and owned property only in Florida, the estate would avoid all state-level death taxes. Federal taxes may still apply, but no state death tax obligations arise.
3. You Live in a Taxing State, but the Deceased Lived Elsewhere Let’s say you live in New York but inherit an estate from an uncle who lived in Florida and owned no property outside Florida. New York cannot tax his estate. The tax obligation follows the decedent’s state of residence, not the beneficiary’s.
4. A Loved One Lived in Florida but Owned Real Estate in New York If your Florida-based uncle owned a second home in New York, the portion of his estate tied to that New York property could fall subject to New York state estate tax—even though he didn’t live there.
5. You Inherit From Someone in an Inheritance-Tax State Imagine your aunt lived in Kentucky, a state with no estate tax but with an inheritance tax. If you live in Florida and inherit from her, Kentucky may tax the value of your inheritance if it exceeds Kentucky’s exemption for your family relationship.
6. The “Snowbird” Scenario John spends six months in Connecticut and six months in Florida. He calls Connecticut home for tax purposes. For estate tax purposes, Connecticut treats him as a resident. Upon his death, Connecticut may tax his entire estate—including his Florida home—because his residency status controls the calculation.
These examples highlight why you need careful estate planning when residency, property ownership, or family ties span multiple states.
Why Planning Matters More During the Holiday Season
Estate planning conversations often feel easier during the holidays because families finally gather in one place. You may discuss aging parents, property, future plans, or responsibilities that fall to adult children. With higher travel, more public activity, and winter health challenges, this season also produces more unexpected loss.
You protect your loved ones by planning with clarity now. A strong estate plan accounts for:
Your state of residence
Any property you own in other states
Who inherits your assets
Whether those beneficiaries face inheritance taxes
How your estate handles federal estate tax rules
Why it’s important to minimize or avoid unnecessary taxation
A thoughtful plan keeps your resources where you want them—supporting your family, not expanding a state revenue stream.
Understanding State Taxes Helps You Protect Your Legacy
Death taxes often catch families off guard because they assume federal rules cover everything. In reality, state estate and inheritance taxes create an additional layer of complexity. When you understand which rules may affect you, you gain the power to build an estate plan that preserves your assets and reflects your wishes.
If your family owns property in multiple states, if you split time between states, or if you worry about how different state laws may affect your beneficiaries, you should speak with an experienced estate planning attorney. These laws shift, and your residence, property mix, or goals may change over time.
We can guide you through those decisions with clarity and confidence.
At Skvarna Law, we help individuals and families across California protect their legacies through thoughtful, proactive estate planning. Whether you need a living trust, a will, incapacity documents, or a full multigenerational plan, our team guides you through each step with clarity and care. We craft personalized solutions that reflect your goals, safeguard your assets, and support the people you love. If you want to review your current estate plan or create one for the first time, we invite you to contact our office. Let’s build the protection your family deserves.
About Skvarna Law in Glendora & Upland, California
At Skvarna Law, we believe estate planning works best when it reflects your real life, your real values, and your real goals. We help clients throughout California create mission-ready plans that protect family, finances, benefits, and legacy. Whether you need a trust, a will, guidance for a loved one, or an update to an existing plan, our firm delivers clarity, care, and a strategy that moves you forward. Reach out today to begin your planning with confidence.
