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A Done Deal: The death knell for the Indiana Inheritance Tax
Posted in Estate Planning

The Indiana legislative session has come to a close and Gov. Mitch Daniels has signed on the dotted line. After many years of legislative proposals from the Indiana Bar and given the state’s fiscal surplus, Indiana has paved the way to put an end to one of the reasons we are home to so many “snow birds” – the Indiana Inheritance Tax. Indiana has one of the highest state death taxes in the country, with rates that top 20 percent. With the enactment of this law, once the credit is fully implemented, Indiana will become one of the more favorable tax jurisdictions. The newly inked law provides many favorable death tax law changes:

  • Expands the class of “Class A” persons to include sons- and daughters-in-law (previously only lineal ancestors and descendants, which includes stepchildren and their descendants)
  • Increases the exemption for transfers to Class A persons to $250,000 (the prior exemption amount was $100,000)
  • As Class A persons, sons- and daughters-in-law have a much more favorable exemption amount of $250,000 (the prior exemption amount was $500)
  • Phases out the Inheritance Tax by providing a credit, such that there will be no tax for persons who die after Dec. 31, 2021
  • Changes to Class A persons are retroactive to estates of persons dying after Dec. 31, 2011

While the law is a giant leap in the right direction, persons who are not “Class A” or “Class B” persons, and are classified as “Class C” persons, receive only a $100 exemption. Class C persons generally are non-relatives and pets. Additionally, with the provision of a credit rather than outright repeal, it might be easier for later sessions of the legislature to stop the credit at any time without actually “raising taxes.” If you have questions about the Indiana Inheritance Tax, please contact Greg Duncan or any other member of Bingham Greenebaum Doll LLP’s Estate Planning Practice Group.

  • Partner

    Greg works with estate and wealth transfer and matrimonial law in the firm's Estate Planning Department and is also part of the Corporate Services Department. Among the legal services he provides for his clients are estate and gift ...

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