Rule of thumb:
As states face budget shortfalls, theyare increasingly averse to lightening up onestate taxes, as the federal government isdoing. In addition to the estate tax, atleast 10 states (Connecticut, New Jersey,Louisiana, Indiana, Iowa, Kentucky,Maryland, Nebraska, Tennessee, andPennsylvania) have inheritance taxes.Inheritance tax rates and exemptions varyfrom state to state, but all of the 10 statesexempt the entire amount left to aspouse. The closer therelationship is between you and theheir, the lower the tax rate and the higherthe exemption. You may be able tospecify in your will that your estate willpay these taxes; otherwise, your heirsmay have to sell off assets to pay thetaxes. Check with your estate plannerto determine your best strategy.