Good Riddance - New York drops estate tax interest rates for loans - Brief Article

Kiplinger's Personal Finance Magazine, April, 2000 by Ronaleen R. Roha

TAXES | The Empire State is the latest to put an end to its DEATH TAX.

AS CONGRESS debates whether to do away with the federal estate tax, some states are burying their versions of the final accounting. New York's estate tax is the most recent to die, meeting its unmourned fate last month. Its demise will save heirs about $400 million a year. Now only three states--Mississippi, Ohio and Oklahoma--impose an estate tax, and all three of them exempt the value of property left to a widow or widower.

In addition to estate taxes, which are paid by an estate before assets are distributed, 13 states--Connecticut, Indiana, Iowa, Kentucky, Louisiana, Maryland, Montana, Nebraska, New Hampshire, New Jersey, Pennsylvania, South Dakota and Tennessee--impose an inheritance tax on the recipients of inherited property. But the inheritance-tax landscape is changing, too. Louisiana's inheritance tax will be gone by July 2004, and Connecticut's by 2005.

Typically, the more closely related the recipient is to the deceased, the lower the inheritance-tax rate. The rate tops out at Montana's 32% for property distributed to distant relatives and those not related to the deceased. In all states except Maryland, all property left to a surviving spouse is exempt from the tax. (Maryland exempts the value of real property and the first $100,000 of personal property left to a spouse.)

Every state, even those states with no inheritance or estate taxes, collects a death tax. It's called the pickup tax, and it applies only to estates that are large enough to be subject to the federal estate tax (over $675,000 this year and next). The pickup tax, a sort of revenue-sharing device, gives the states a portion of the estate tax that would otherwise go to the feds.

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BORROWING: Low loan rates around the U.S.

                                 RATE/DESCRIPTION
New York       LENDER            (INDEX PLUS MARGIN)

Fixed-rate     Dime Savings      8%/2.5 pts.
30-year

One-year ARM   Astoria Federal   5.75%/0 pts.
                                 (Treasury index + 2.75)

Home-equity    Dime Savings      6%/3 mos., $10,000 minimum
line                             (prime + 1.25)

Car loan       Dime Savings      8.15%

Atlanta

Fixed-rate     Bank of North     7.88%/2 pts.
30-year        Georgia

One-year ARM   Bank of North     6.63%/1 pt.
               Georgia           (Treasury index + 2.88)

Home-equity    First Citizens    7.5%/6 mos., $10,000 minimum
line                             (prime + 1.5)

Car loan       First Citizens    7.9%

Chicago

Fixed-rate     Bank One          8.25%/1.1 pts.
30-year

One-year ARM   Harris Trust      6.25%/0 pts.
               and Savings       (Treasury index + 2.75)

Home-equity    Old Kent Bank     7.5%/6 mos., $25,000 minimum
line                             (prime + 1)

Car loan       Harris Trust      8.6%
               and Savings

Phoenix

Fixed-rate     Washington        8.13%/1 pt.
30-year        Federal Savings

One-year ARM   First Arizona     6%/0 pts.
               Savings           (Treasury index + 2.75)

Home-equity    M&I Thunderbird   6.99%/9 mos., $10,000 minimum
line           Bank              (prime + 1.25)

Car loan       National Bank     8.25%
               of Arizona

Los Angeles

Fixed-rate     Sanwa Bank/       7.75%/2.38 pts.
30-year        California

One-year ARM   California        6.13%/1.41 pts.
               Federal           (Treasury index + 2.5)

Home-equity    Washington        5.25%/6 mos., $5,000 minimum
line           Mutual            (prime + 1.74)

Car loan       Downey Savings    8.25%
               and Loan

                                 TELEPHONE
New York       LENDER            NUMBER

Fixed-rate     Dime Savings      800-843-3463
30-year

One-year ARM   Astoria Federal   800-278-6742

Home-equity    Dime Savings      800-843-3463
line

Car loan       Dime Savings      800-843-3463

Atlanta

Fixed-rate     Bank of North     770-751-4700
30-year        Georgia

One-year ARM   Bank of North     770-751-4700
               Georgia

Home-equity    First Citizens    800-399-1005
line

Car loan       First Citizens    800-399-1005

Chicago

Fixed-rate     Bank One          888-963-4000
30-year

One-year ARM   Harris Trust      888-340-2265
               and Savings

Home-equity    Old Kent Bank     800-653-5368
line

Car loan       Harris Trust      888-340-2265
               and Savings

Phoenix

Fixed-rate     Washington        602-468-2767
30-year        Federal Savings

One-year ARM   First Arizona     800-280-2800
               Savings

Home-equity    M&I Thunderbird   602-241-6500
line           Bank

Car loan       National Bank     800-655-7622
               of Arizona

Los Angeles

Fixed-rate     Sanwa Bank/       800-237-2692
30-year        California

One-year ARM   California        800-225-3334
               Federal

Home-equity    Washington        800-788-7000
line           Mutual

Car loan       Downey Savings    800-936-9639
               and Loan