You're thinking of passing on your estate to your children, but you really don't want the government to tax your assets when they're just changing hands. Is there an inheritance tax that has to be paid in Tennessee? Does the government get to take a cut of your money before your heirs get it?
There used to be, which is why many people are confused about this process. In 2012, the state began to repeal it, slowly phasing it out. Last year, in 2016, they did away with it entirely. There is now no estate tax or inheritance tax that has to be paid.
Even before the law was entirely repealed, the threshold was high enough that many estates were not taxed. In 2014, the Tennessee Inheritance Tax exemption was set at $2 million. In 2015, it climbed up to $5 million. Those who did have to pay saw taxes set between 5.5 percent and 9.5 percent.
So, if your estate consisted of a home that was worth $500,000 and another $1,500,000 in cash and other assets, you wouldn't have had to pay anything in 2014 or 2015. Now that the tax has been entirely repeated, you still won't.
As the changes to the law show, it can be altered by new rulings in the future. That's why it's so important to keep an eye on any changes to the law and to watch how they'll impact your estate plan. Any time that there is a major change, it may be worth reviewing your current plan to make sure that it still fits with the new laws.
Source: Tennessee Probate and Estate Tax Laws, "FindLaw," accessed March 24, 2017