When it comes to estate planning, the more a New York resident knows about tax exemptions and tax laws, the better off he or she will be. The following are two tax issues that the average estate planner should know about.
Estate planners should know about changing federal laws that apply to estate-tax exemptions. As of 2015, individuals can bequeath as much as $5.43 million tax-free to their heirs. Also, if the individual happen to be married, both the spouse will each be entitled to $5.43 million worth of tax exemptions. Interestingly, if one spouse dies prior to the other, any unused exemptions will be passed on to the surviving spouse’s estate.
Gift tax exemption is another area of law that estate planners should consider. Individuals are permitted to give away as much as $5.43 million worth of gifts to whomever they want throughout the course of their lives without the money being subjected to federal gift taxes. Like the estate tax exemption, married couples are each entitled to $5.43 million in gift tax exemption separately. Interestingly, gifts valued less than $14,000 will not affect the total amount of the $5.43 million federal gift tax exemption.
Knowing the tax rules and how they affect a particular estate can help New York estate planners navigate taxes that relate to gift giving and passing on an estate to their heirs. It also identifies any areas of tax liability that may need to be addressed through trust planning, which could help individuals avoid a wide variety of unnecessary tax liabilities. Any estate tax burden that an individual can bypass can be celebrated as more money to be passed on for the benefit of heirs.
Source: Wall Street Journal, “Three Things You Need to Know About Estate Planning” Bill Bischoff, Feb. 11, 2015