SimplyTrust Knowledge Base

A: An inheritance tax is charged to the person receiving property (as opposed to estate tax that is charged to the estate itself). The rate often depends on family relationships. Delaware chose to move away from that approach. Some supporters argued it was outdated. They wanted simpler rules and stronger competition with nearby states.

A: No. For decades, Delaware did impose a state estate tax tied to the federal estate tax system. Under that system, estates above a certain value had to pay a tax on the value of assets before passing them to heirs. The exemption closely tracked the federal estate tax exclusion. But lawmakers and advocates increasingly viewed the tax as a deterrent to economic activity and a potential reason for residents to relocate.

A: Have you ever considered how trust funds shape perceptions of hard work and success? An interesting story highlights a family member, an elderly cousin, who has enjoyed a life cushioned by a trust fund, yet criticizes younger generations for wanting an easy life. This contradiction raises important questions about wealth, inheritance, and the values we pass down.

A: Alabama has long recognized revocable trusts as a valid estate planning tool. Over the years, the state has adopted provisions from the Uniform Trust Code (UTC), which standardizes trust laws across multiple states. Alabama's version generally favors simplicity, local court oversight, and probate avoidance. But the state doesn't offer much in the way of asset protection for revocable trusts—since assets are still considered part of your personal estate, they're not shielded from creditors.

A: Well, because your estate probably includes a lot more things than you realize. It's not just obvious things of value like your home, car, and savings. It's also less obvious things like sentimental items (e.g., family heirlooms), digital assets (e.g., social media accounts) and pets (yes, pets!).

A: No. Alabama's history with inheritance tax is straightforward. While some states implemented inheritance taxes in the early 20th century, Alabama chose not to create its own long-term system. Instead, like many states, Alabama relied on a "pick-up" estate tax system that indirectly brought in funds when a federal estate tax return was filed.