What is a Step-Up In Basis?

When you plan your estate, you may wonder about taxes that may be applicable. There is a federal estate tax, and it carries a $5.34 million exclusion in 2014. If the value of your estate does not exceed this amount, you do not have to worry about federal estate tax exposure. On the other hand, if you want to transfer more than $5.34 million, the estate tax looms large. The maximum rate of the federal estate tax is 40 percent. We practice law in the state of Connecticut. In our state there is a state-level estate tax. At the present time the exclusion is just $2 million. As a result,  you could be exempt from the federal estate tax, but exposed to the Connecticut state estate tax. Inheritance Tax An estate tax is levied on the entirety of the taxable portion of the estate in question. An inheritance tax is levied on transfers to each nonexempt inheritor. There is no federal inheritance tax, but there are a few states in the union that have state-level inheritance taxes. Fortunately, t


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