Last year, Joan Rivers died with an estate of roughly $100 million. In her last will and testament she described herself as a resident of New York State but a domiciliary of the State of California. What’s the difference?
Prior to 2000, there was no difference and all estates that paid federal taxes had to pay state death taxes based on a pickup chart listed on the tax return. It was a graduated tax predicated on the size of the estate; every estate, however, irrespective of domicile, paid the same amount on a percentage basis to the state of domicile. Circa 2000, the IRS disconnected the state death tax payments from the federal tax. The result was that some states chose not to have any state death tax while other states levied a substantial tax of their own. Read more