Episode 62: How Geography Can Wreck Your Estate Plan

Written By Jillian Mastroianni

Episode 62

Host: Jill Mastroianni

How Geography Can Wreck Your Estate Plan

Where you live can cost, or save, your estate hundreds of thousands of dollars. In this Tuesday Triage episode, Jill Mastroianni breaks down a listener question about estate taxes, domicile, and owning property in multiple states. Using a real-world scenario involving Washington, D.C., Maine, Georgia, and Kentucky, Jill explains how state estate and inheritance taxes actually work, why domicile is more than just a mailing address, and where people get tripped up when geography and estate planning collide. This episode helps separate fear from facts so you can make informed decisions about where, and how, you live.

What You’ll Learn in This Episode

  • Why “where you live” is a legal decision, not just a lifestyle choice. Domicile is about intent and objective facts, not where you’d prefer to be.

  • What domicile really means for estate tax purposes. Courts look at factors like driver’s licenses, voting registration, and where you actually spend your time, not just property ownership.

  • Why federal estate taxes aren’t the real issue for most people. With a 2026 exemption of $15 million per person, most estates won’t owe federal estate tax.

  • How state estate taxes can create very different outcomes. The same $10 million estate can trigger dramatically different tax bills depending on whether you live in Washington, D.C., Maine, Georgia, or Kentucky.

  • Why owning property in another state can still trigger taxes. States like Maine can impose estate tax on non-residents who own real estate there and may place liens until a return is filed.

  • The difference between estate taxes and inheritance taxes. Estate taxes are paid by the estate. Inheritance taxes are paid by the beneficiary.

  • Why beneficiary relationships affect tax outcomes. In states like Kentucky, close family members may be exempt, while friends or non-relatives could face significant inheritance tax bills.

  • How multi-state property ownership can create multiple probates. Without planning, your estate could be probated in every state where you own real estate.

  • One common strategy to avoid ancillary probate. How revocable trusts can help consolidate administration when property is spread across states.

Resources & Links

Change of Domicile Checklist: 

https://www.deathreadiness.com/domicile-change-checklist

Episode 5: Why You Shouldn’t Worry About the Estate Tax:

https://www.deathreadiness.com/podcast/why-you-shouldnt-worry-about-the-estate-tax 

Episode 19: Why You Need (or Don’t Need) a Trust:

https://www.deathreadiness.com/podcast/episode-19-how-to-know-if-you-need-a-trust 

Get organized with The Death Readiness Playbook:
https://www.deathreadiness.com/playbook

Submit a question for a future Tuesday Triage episode:
https://www.deathreadiness.com/tuesdaytriage

Connect with Jill:

Did you enjoy this episode? Share it with someone you care about.

  • Your estate might owe hundreds of thousands of dollars or you might save your estate hundreds of thousands of dollars, all based on where you live. Today, I break down a listener question about estate taxes, domicile, and owning property in multiple states. From Washington, D.C. to Maine, Georgia, and Kentucky, I’ll walk through how estate and inheritance taxes at the state level actually work, and where people get tripped up. If you’ve ever wondered how geography affects your estate plan, today’s episode is a great place to start.

    Welcome to the Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni, former estate attorney, current realist, and your guide to wills, trusts, probate and the conversations no one wants to have. If your Google search history includes, “Do I need a trust?” “What exactly is probate?” and “Am I supposed to do something with mom’s Will?” you’re in the right place.

    The last time I was in Half Moon Bay, California, visiting my best friend Lauren, there was an open house for a beautiful home just around the corner from where she lives. I love going to open houses, and since this one was so close, we decided to walk over.

    The moment I stepped inside, I stopped being a casual observer. I walked the house carefully. I chatted with the real estate agent. I asked to see the office shed in the backyard, the one where I’d be recording this podcast. I examined the fence to see what adjustments I’d need to make for our dogs.

    As we were leaving, Lauren stopped and said, “Wait—I’m confused. Are you actually thinking about moving out here?”

    Someday, I’d love to live on the same street as my very best friend. For many reasons, that’s not an option right now. But if and when I make it big, we’ll revisit that idea, along with the long list of pros and cons already living in my head.

    And here’s what’s firmly in the “pros” column today: my daughter says Lauren’s house is her favorite place in the world. My husband loves California. I love California. And I love Lauren deeply. For now, though, instead of me moving west, Lauren is coming east. She’s making her very first trip to Michigan next month. Maybe I’ll take her to an open house here.

    The reality is that it’s far less expensive to live in the metro Detroit area, where I am, than it is to live in Half Moon Bay. If I ever move to California, it won’t be to save money. It will be because I’ve decided that’s how I want to live this one life I have.

    Today’s Tuesday Triage episode is focused on a very specific financial question—estate taxes—because that’s exactly what today’s listener, Roberta, asked about. But as much as we’re going to talk about the financial side of choosing where you live, it’s important to remember that taxes are only one piece of a much bigger decision-making puzzle.

    And if you want a guide that helps you connect the dots between your life and your estate plan, check out The Death Readiness Playbook at deathreadiness.com/playbook. That’s deathreadiness.com/playbook.

    Now let’s get started.

    Roberta lives in Washington, D.C. She owns real estate in more than one place, specifically in the District of Columbia, Maine, and Georgia. She also has family in Kentucky and has considered settling down there. As part of her estate planning, she wants to understand where it makes the most sense for her to have her principal residence, or, in legal terms, where she should be domiciled, from an estate tax perspective.

    Roberta is married, and her and her spouse’s combined assets are worth about 10 million dollars.

    Before you start thinking, “I don’t have 10 million dollars, so this doesn’t apply to me,” I want to stop you. I don’t have 10 million dollars either. This episode isn’t just for people with large estates. The goal here is not only to help Roberta ask the right questions, but also to unpack some of the fear-based assumptions people make about taxes that may, or may not, apply to their own situation.

    But before we dive into the laws of the different states Roberta is considering, we need to take a step back and ask a foundational question: what does it actually mean to be domiciled somewhere?

    A person’s domicile is their principal residence.

    Okay, but what does principal residence really mean?

    Can you just buy an inexpensive property in a low-tax state and say that you live there? No, you can’t. 

    And here’s why.

    Determining domicile, or principal residence, is a subjective analysis because it depends on intent. Where do you intend to live on a permanent basis? But that intent has to be supported by objective facts. Courts look at a number of factors to figure this out.

    I’ll link to a change-of-domicile checklist in the show notes if you want to go deeper. But some of the big ones include getting a driver’s license in the new state, spending at least 183 days there each year, and registering to vote.

    In some cases, state law even defines domicile directly for estate tax purposes. For example, Maine includes its definition of domicile right in the estate tax section of its code.

    We only get one life. And while I don’t think estate tax liability should be the deciding factor in where you live, I do think it’s a legitimate consideration. I’m a big believer in living where you love, but I’m also a big believer in understanding the facts and making informed choices.

    So with that groundwork laid, let’s get into Roberta’s Tuesday Triage question.

    Way back in Episode 5, Why You Shouldn’t Worry About the Estate Tax, I did a full deep dive on federal estate taxes. I’ll link to it in the show notes. In that episode, I break down a topic that feels overwhelming for a lot of people, and explain why, for most of us, federal estate taxes don’t actually belong on the worry list.

    For today, I’m going to give you the highlights to orient us.

    Let’s start with the basics. What is an estate tax?

    An estate tax is a tax on the transfer of a person’s assets at death. It’s based on the total value of the estate, and it’s paid by the estate itself, not by the heirs or beneficiaries. More formally, it’s a tax on the privilege of transferring property at death.

    And importantly, estate taxes are paid before assets are distributed to beneficiaries.

    We’ll start with the federal estate tax, and then we’ll move into what’s happening at the state level.

    The federal estate tax only applies if an estate exceeds a certain exemption amount. For 2026, that exemption is $15 million per person, or $30 million for married couples.

    So generally speaking, if you die in 2026 and your estate is below those amounts, your estate will not owe any federal estate tax.

    There is one important caveat: taxable gifts you made during your lifetime get added back into the calculation. If you want a deeper explanation of how that works, Episode 5 walks through it in plain English.

    Based on what Roberta shared, her combined estate is about 10 million dollars. Under current law, that means federal estate tax should not be a concern—unless she’s made several million dollars in taxable gifts that I don’t know about.

    The good news is that most of us, including Roberta, do not need to worry about the federal estate tax.

    Where things get more interesting, and more nuanced, is at the state level.

    Roberta asked specifically about several different places, so let’s take them one at a time. We’ll start with Washington, D.C. It’s not technically a state, but it does impose an estate tax, so it absolutely matters here.

    In 2026, Washington, D.C. imposes an estate tax on estates valued at more than $4,988,400. The tax rates start at 11.2% and go up to 16%.

    So what does that mean for Roberta?

    Roberta is married, but for purposes of today’s analysis, I’m going to assume the entire 10 million dollars estate is in her name alone. That assumption produces the highest possible tax outcome. If, instead, Roberta owns $5 million and her spouse owns the other $5 million, the estate tax due at Roberta’s death would be significantly lower.

    If Roberta were to die in Washington, D.C. in 2026 with a 10 million dollars estate, roughly $5 million of that estate would be above the D.C. estate tax exemption.

    Under current law, the total D.C. estate tax liability in that scenario would be just under $700,000.

    Now let’s move on to Maine.

    As of now, Maine has not yet announced its 2026 estate tax exemption amount. There was a bill introduced in April 2025 that would have reduced the exemption to $1 million, but that bill did not move forward. The last time Maine’s exemption was that low was between 2006 and 2012. Since then, it has increased steadily.

    For decedents dying in 2025, Maine’s estate tax exemption was 7 million dollars. So for purposes of today’s discussion, I’m going to assume the 2026 exemption remains at 7 million dollars. Maine’s estate tax rates range from 8% to 12% on the portion of the estate that exceeds that exemption.

    And here’s where Maine becomes more complicated.

    Maine doesn’t only tax people who are domiciled there. It can also impose estate tax on someone who isn’t a Maine resident, but owns property in Maine.

    If Roberta is a resident of Maine at her death and has a 10 million dollars estate, she would owe approximately $240,000 in Maine estate tax. That tax applies only to the $3 million of her estate that exceeds Maine’s assumed 7 million dollars exemption.

    So as a Maine resident, Roberta’s state estate tax liability would be significantly lower than if she were a resident of Washington, D.C., where we estimated the tax at roughly $700,000.

    But Roberta also owns real estate in Maine. Let’s assume she has a vacation home there worth 1 million dollars.

    Even if Roberta is not a resident of Maine, the state of Maine will automatically place a lien on any real estate and tangible personal property she owns in Maine. That means not just the house itself, but everything in and around it—furniture, jewelry, a pool table, kayaks, jet skis. That lien can only be released by filing a Maine estate tax return. There is a short-form return available for estates that are well below the 7 million dollars exemption amount, but even small estates are still required to file a return.

    Here’s the key rule: for a nonresident decedent, Maine calculates the estate tax as if the person were a Maine resident—and then prorates the tax based on how much of the estate is actually located in Maine.

    So how does that apply to Roberta?

    Roberta’s total estate is 10 million dollars. Of that, $1 million consists of Maine property, including the real estate and the tangible personal property associated with it. In other words, Maine property makes up 10% of Roberta’s total estate.

    If Roberta were a Maine resident, her estate tax would be approximately $240,000. Because she is not a Maine resident in this scenario, Maine takes 10% of that amount.

    That means the Maine estate tax due if Roberta were not a resident of Maine but owned a 1 million dollar property there would be about $24,000.

    Let’s pause and take stock of where Roberta’s estate tax liability stands so far.

    If Roberta dies as a resident of Washington, D.C., her estate would owe approximately $700,000 in estate tax.

    If she dies as a resident of Maine, her estate would owe approximately $240,000 in estate tax.

    If she dies living somewhere else, but still owns a 1 million dollar property in Maine, her estate would owe approximately $24,000 in Maine estate tax.

    The bottom line is this: as long as Roberta owns property in Maine, Maine is going to take a slice of her estate, whether she’s domiciled there or not.

    Now let’s move on to Georgia.

    Thankfully, Georgia is easy. Georgia is one of 38 states that does not have an estate tax. If Roberta is domiciled in Georgia at her death, Georgia will not impose any estate tax on her estate.

    Lastly, because Roberta has family in Kentucky and has considered living there, let’s take a look at what’s going on in Kentucky.

    Kentucky doesn’t have an estate tax but it does have an inheritance tax. And yes, that’s different. So what is an inheritance tax, and how does it work?

    I’ll be honest: I kind of wish Kentucky weren’t on Roberta’s list, because inheritance taxes muddy the water. Only six states still have them—Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania—which means most people never have to think about them at all.

    Unlike an estate tax, an inheritance tax is not a tax on the estate. It’s a tax on the person who receives property from the estate.

    I’m going to simplify this a bit, because we don’t need to get deep into the weeds. In Kentucky, all property owned by a Kentucky resident is generally subject to the inheritance tax, except for real estate located in another state. And real estate and tangible personal property located in Kentucky and owned by a nonresident is also be subject to the inheritance tax.

    So how does this apply to Roberta?

    First, let’s assume Roberta does establish her principal residence in Kentucky.

    This is where things can get complicated, not so much for Roberta, but for her beneficiaries.

    Kentucky divides beneficiaries into three classes: Classes A, B, and C.

    Class A beneficiaries include a surviving spouse, parents, children, stepchildren, grandchildren, siblings, and half-siblings. Class B beneficiaries include more distant relatives like nieces and nephews, aunts and uncles, and great-grandchildren.

    Here’s the good news: Class A beneficiaries are completely exempt from paying Kentucky inheritance tax.

    And for most people, that’s the end of the story. Roberta is married. It’s common for married couples to leave everything to a surviving spouse. And if Roberta has children and her spouse predeceases her, it would be common for her to leave assets to her children.

    Because Roberta’s spouse and children are Class A beneficiaries, they would owe no Kentucky inheritance tax. So even though Kentucky’s inheritance tax sounds complicated, it may not apply to Roberta at all, whether she lives in Kentucky or not.

    But let’s change the facts slightly.

    Suppose Roberta is a Kentucky resident and wants to leave $25,000 to her best friend, Megan.

    Megan is not a Class A beneficiary. She’s also not in Class B, which covers more distant family members. Megan falls into Class C, which includes everyone else.

    Class C beneficiaries receive a $500 inheritance tax exemption, and the inheritance tax rate ranges from 6% to 16%, depending on the size of the gift.

    On a $25,000 gift, the inheritance tax owed by Megan would be about $1,800. And that’s an important point: Megan pays that tax, not Roberta’s estate.

    Megan would be responsible for paying the inheritance tax within 18 months of Roberta’s date of death. So, assuming she receives her distribution from the estate within that 18-month period, Megan should be able to pay the inheritance tax with her actual inheritance. 

    Now let’s look at one more scenario.

    Assume Roberta is not a Kentucky resident, but she owns a $500,000 home there that she uses when visiting family.

    Kentucky’s rule is that real estate located in Kentucky is subject to the inheritance tax.

    But remember, Class A beneficiaries are exempt. So if Roberta leaves that Kentucky home to her spouse, parents, children, stepchildren, grandchildren, siblings, or half-siblings, no inheritance tax would be due.

    Suppose Roberta wants her best friend, Megan, who lives in Kentucky, to inherit her Kentucky home, which is worth $500,000. Megan is a Class C beneficiary, so she is not exempt from paying Kentucky inheritance tax.

    On a $500,000 inheritance, Megan would owe approximately $76,000 in Kentucky inheritance tax. That’s a significant bill. And remember, Megan owes that tax personally. Roberta’s estate doesn’t pay it for her.

    If Roberta truly wants Megan to be able to keep the house, rather than sell it to pay the tax, Roberta should consider leaving Megan additional cash. That way, even after paying inheritance tax on the cash itself, Megan still has enough liquidity to cover the inheritance tax on the house.

    Now let’s recap what we’ve learned.

    If Roberta dies as a resident of Washington, D.C., her estate would owe approximately $700,000 in estate tax.

    If she dies as a resident of Maine, her estate would owe approximately $240,000 in estate tax.

    If she dies as a resident of a state other than Maine, but still owns her 1 million dollar property in Maine, her estate would owe approximately $24,000 in Maine estate tax.

    If she dies as a resident of Georgia, her estate would owe no state estate tax to Georgia. Georgia does not have an estate tax.

    And if Roberta dies as a resident of Kentucky, or owns property in Kentucky, her beneficiaries may owe Kentucky inheritance tax, depending on their relationship to her. Her closest family members, like her spouse, children, grandchildren, parents, and siblings, are exempt from Kentucky inheritance tax, regardless of the value of what they receive from Roberta’s estate.

    But estate and inheritance taxes aren’t the only financial considerations that matter. Income taxes, property taxes, sales taxes, and overall cost of living all factor into where it makes sense to live. A full tax and financial analysis is beyond the scope of today’s Tuesday Triage episode, but it’s something Roberta should consider before making any final decisions.

    And finally, wherever Roberta ends up establishing her domicile, she also needs to think beyond taxes when she owns real property in multiple states. Without planning, her estate could end up going through probate not just where she lives, but in every state where she owns real estate.

    One common way to avoid that is to transfer real estate into a revocable trust. A revocable trust allows Roberta to maintain full control over her real estate during her lifetime, while avoiding what’s known as ancillary probate in each state where the real estate is located.

    If you want a deeper dive into revocable trusts and how they work, I’ll link to Episode 19, Why You Need (or Don’t Need) a Trust, in the show notes.

    Where you live is about so much more than taxes, but taxes are part of the reality. My hope is that today’s episode helped you separate fear from facts, and gave you a clearer framework for thinking through domicile and multi-state ownership. You only get one life, and you deserve to make decisions that align with how you want to live it—eyes open and fully informed. That’s what death readiness is really about.

    If today’s episode made you realize how many moving pieces there are in estate planning, you’re not alone. The Death Readiness Playbook was created for exactly this moment: when you know you need to get organized, but don’t know where to start. It helps you inventory what you have, understand what actually matters, and prepare for conversations before there’s a crisis. You can learn more at deathreadiness.com/playbook. That’s deathreadiness.com/playbook.

    Thanks to Roberta for submitting a complicated, but important question. If you have a question you’d like me to answer on a future Tuesday Triage episode, submit it at deathreadiness.com/tuesdaytriage. That’s deathreadiness.com/tuesdaytriage. The link is in the show notes.

    Thanks for being here today.

    This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.

    Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast.  While my mom is an attorney, she’s not your attorney.  The Death Readiness Podcast is for educational and entertainment purposes only.   It does not provide legal advice.  For legal guidance tailored to your unique situation, consult with a licensed attorney in your state.  To learn more about the services my mom offers, visit DeathReadiness.com.

Jillian Mastroianni
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Episode 61: How to Avoid Mistakes with Debt After Death