Delaware De-Couples It's Estate Tax
July 14, 2009

Delaware has recently enacted an estate tax on residents and the real and tangible personal property of non-residents. Under this “de-coupling”, the tax is calculated using the rate schedule for state tax credits available under federal law as it existed in 2001. For our clients owning Delaware properties, the Delaware estate tax is calculated as follows. Calculate the estate tax under Sec. 1502 of Title 30 of the Delaware Code, on the Delaware property and multiply that number by a fraction the numerator of which is the value of the Delaware situs property and the denominator of which is the value of the entire estate (excluding real and tangible personal property not located in Delaware). There are certain exemptions for agricultural properties and buildings. The good news is that under the current law, the act is scheduled to sunset four years from its effective date of July 1, 2009. In consultation with local counsel it has been recommended that non-Delaware clients consider creating a non-Delaware LLC to own the real property. As the act calls for a tax on real and tangible person property located in the state, changing the equity ownership in real property to intangible LLC interests seems to fit the bill for now. If you have additional questions regarding the newly enacted Delaware estate tax act, please feel free to call and we can direct you accordingly.

For more information, please visit:  Delaware House Bill 291

If you have questions, please contact:
Charles B. Jones

CJones@TandLLaw.com
(410) 752-2468