Build Tax Solutions Into Your Estate Plan
Estate planning is essential for New York families. Not only does it help protect the family home, finances and business assets, but it can also account for any unexpected costs that arise with the death of a loved one. Among the most impactful and overlooked considerations are federal and state death taxes.
Exemptions to these taxes are currently quite common, meaning that more New York families than ever can pass more of their wealth to their heirs. However, even these generous regulations are subject to change, and overlooking any tax preparations can risk the family’s entire estate. Thankfully, the attorneys at Ingold Law PLLC are here to provide personalized estate planning solutions that fit your individual needs.
The Precarious New York State Tax Cliff
Today, many estates are not large enough to owe either federal or state death taxes. However, one simple mistake or overlooked item can cause havoc when it comes to taxes. For example, in New York state, we have a tax “cliff” or limit on how much an estate can be worth while still maintaining exemptions. If a family’s estate exceeds 105% of the 2021 NYS exemption limit of $5.93 million, their estate will be subject to a 5% to 16% New York state tax rate.
Estate plans that account for solutions to these impending tax complications includes strategies to secure these vital exemptions. These techniques include:
- Charitable bequests: By making conditional charitable bequests in a will or trust, we can help reduce the value of an estate upon death to avoid costly taxes.
- Lifetime gifts: Assets can be moved out of an estate through gifting. Any person can make lifetime gifts up to $11,700,000 before owing gift tax. Decedents should try to make these gifts early, as any amount given in the three years before their death will not be exempt.
- Marital trusts: These trusts allow the decedent to place their community property, like a shared marital home, into a trust. These trusts maximize exemptions and allow the surviving spouse total use of the asset without concern.
- Irrevocable life insurance trusts (ILIT): Transferring funds into an ILIT is often used to pay insurance premiums. When the donor dies, the trust inherits the life insurance and not the estate, helping avoid unnecessary taxation.
Based in Williamsville, our skilled attorneys are familiar with many more tactics that can help business owners, real estate developers and investors.
Start Building Protections Today
We are eager to find out how we can leverage our skills and experience to help residents of Buffalo and beyond protect their estates from excessive taxation. Just call 716-972-3698 or contact us online to schedule a consultation today.