As New Yorkers address their needs for a comprehensive estate plan, those with significant assets must pay strict attention to tax implications and how their heirs will be shielded from onerous and unexpected expenses. Much has been said in the media as to how the new tax laws will impact them. For those who are trying to address these concerns when they are drafting estate planning documents, it is important to know how to mitigate these costs while adhering to the law.
With the new tax law, the gift and estate tax exemption was increased. For each person, it is now $11.18 million. This is double what it was in 2017. Because of this change, a person who has this amount of wealth can provide the new amount to others as a gift before they die or as part of the estate plan after they die. They will no longer be affected by the tax of 40 percent. It is important to remember that this is not permanent. It will last through 2025 when it will again reduce to $5.49 million, barring changes to the law.
This could be perceived as an issue that is limited to those who are wealthy and prominent in society. However, those who have substantial assets that go beyond money in the bank and include properties and other assets might not realize that their total – when it is all accrued – could easily accumulate to reach the point where these issues are concerning. While giving away money and assets as a gift can be beneficial, there are alternatives such as trusts that are effective in passing money or items of monetary value along to heirs.
Transferring wealth with as limited a tax impact as possible is something everyone should be concerned with. There are many options that can be used to provide protection to all involved. Having legal assistance that understands various strategies that can be useful and tailoring the estate planning documents to the individual needs is vital. Consulting with an attorney is the first step.