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The United States seems to have settled down, at least in terms of setting an estate tax. We're likely to have the $5.25 million exemption (adjusted for inflation) for the "indefinite" future and a new top estate tax bracket rate of 40 percent.
Meanwhile, changes in the inheritance tax have occurred around the world since my last survey in 2008. (See "Death Taxes Around the World," Trusts & Estates, November 2008 at p. 50.) So, it's time for an update.
Some countries have abolished the tax; others are adding it; several just keep changing it. One widespread change, including in the United States, is adjusting to the evolving laws recognizing the validity of same-sex marriages and their estate tax treatment.
On a practical level, advisors will find it helpful to know where global clients should be living at the end of their lives for the best tax treatment. All, except U.S. citizens, have the flexibility to choose a new tax jurisdiction by moving there. In fact, people with fortunes are increasingly moving out of high inheritance tax countries.
A few technical notes: I'm looking only at the tax at death, referred to here as an "inheritance tax," although a number of countries do have an annual tax on net worth, which often is referred to as a "wealth tax" (and, usually, is relatively small - 1 percent to 3 percent - and frequently changed). Also, in most cases, a true inheritance tax has rates that vary based on the closeness of the relationship of the recipient to the decedent. Very few countries have a true estate tax, such as that of the United States, which bases the rates only on the size of the assets held by the decedent. Also, very few countries other than the United States allow a deduction for gifts to charities as a way to reduce the inheritance tax.
Worldwide Survey
Here's the answer to the question: Does this country have an inheritance tax?
Argentina - No inheritance tax.
Australia - No, it was abolished in 1979.
Austria - No, as of Aug. 1, 2008, there's been no inheritance tax. This wasn't a policy choice. Instead, in 2007, the Constitutional Court of Austria held that although Austria could have an...