We are going to look at a couple of the unusual provisions that are part of the New York state estate tax parameters in this post. However, before we proceed, we should explain the basic framework for the federal estate tax so you are fully informed. High Net Worth Individuals This tax only applies to very wealthy people, because you can transfer a certain amount before the estate tax would kick in. The threshold is called the credit or exclusion, and after a tax cut was enacted for 2018, the …
Wills Serve Varying Purposes
One of the primary reasons why you should discuss your family situation and your estate planning goals with an attorney is because there are many different approaches that can be taken. As a layperson, there is no reason why you should choose one course of action over another. With this in mind, do you know that there are quite a few different types of wills that are used in our field? If you are not aware of this, keep reading, because we going to look at a number of them in this …
Can a Person With a Disability Fund a Special Needs Trust?
Most Americans get health insurance through their employers. A significant percentage of people with disabilities do not have the ability to work, so this is not an option for them. And of course, the lack of employment will impact them in hand-to-mouth ways. Fortunately, there are government benefits that are designed to provide for folks that are in this situation. Many people with disabilities qualify for Medicaid, which is a jointly administered federal/state government health …
Is There an Inheritance Tax in New York?
In this post, we will provide some clarity about inheritance taxes per se. But first, we will share some general information about estate transfers and taxation. Regular Income Taxes Since you are supposed to report just about any type of income imaginable, a lot of laypeople would be ready to pay taxes on their inheritances. Fortunately, a direct inheritance is not subject to regular income taxes, and this would include life insurance proceeds. IRAs are a different matter, and we will discuss …
A Simple Will May Not Be the Right Choice
A lot of people that have not explored the subject very deeply boil the process of estate planning down to a single act. You execute a simple will at some point in time, and that's all there is to it. This is an oversimplification, because there are other things to think about beyond the matter of asset transfers, but we will get into them in at another time. In this post, we will explain some of the reasons why a will may not be the best centerpiece for your estate plan. Probate Hassles If …
What Is a HIPAA Release?
The acronym HIPAA stands for the Health Insurance Portability and Accountability Act of 1996. In this post, we will explain why this piece of legislation is something to take into consideration when you are planning your estate. Advance Directives for Health Care Everyone is well aware of the fact that you have to facilitate postmortem asset transfers when you put your estate plan in place. A lot of people think this is the long and short of it, but a proper estate plan will also address …
Do I Pay Capital Gains Taxes on Appreciated Assets?
We are going to look at the guidelines for capital gains taxes on inheritances in this post. But before we focus in on that subject, we will provide a general overview of taxation as it applies to your estate. State and Federal Income Taxes Since the taxman always wants a piece of the pie, a lot of people assume that you would have to claim an inheritance as taxable income. In fact, this is not the case, and there is a rationale behind this arrangement. To explain through the use of a …
Do I Have to Report Living Trust Income?
A living trust is a very effective estate planning tool that can be the right choice for a lot of people that assume they should use a will. We are going to explain taxes on living trust distributions in this post, but first, we will provide an overview of the advantages they provide. Total Control and Flexibility One of the reasons why many folks assume that they should not use a trust is because they are afraid of losing control of their assets. There are irrevocable …
Are You Sure You Don’t Need a Trust (Part 2)?
In our last entry, we explained three reasons why a trust can be a better choice than a will. We will complete the series here with three more scenarios that would call for the utilization of a trust. Reaction to Estate Tax Exposure We have a federal estate tax in the United States that packs a wallop with a 40 percent top rate. The exclusion is the amount that can be transferred before the estate tax would be applicable on the remainder. For the rest of this year, the exclusion is $11.58 …
2021 Federal Estate Tax Exclusion Update
The federal estate tax looms large because it carries a heavy hitting 40 percent maximum rate. That’s the bad news, but there is some corresponding good news to go along with it. A small percentage of people actually have to pay the tax, because there is a robust credit or exclusion. It will increase in 2021 and we will provide that figure, but first, we will share some general information about this tax. Exclusion Changes The exclusion has changed dramatically over the last 20 years, …
An Overview of IRA Inheritance Planning
If you don’t need to use the money in your individual retirement account, you will naturally start to think about how it will fit into your inheritance plan. We will share all the important facts here, include a recent change that impacts IRA beneficiaries in a big way. Traditional vs. Roth IRAs The two commonly used individual retirement accounts are the traditional account and the Roth IRA, and the major difference between them is the timing of the taxation. When you have a traditional …
Gift Taxes 101
There is a federal estate tax in the United States that that can have a serious impact on your legacy, because it carries a 40 percent maximum rate. That’s the bad news, but the good news is that most people do not have to pay the tax, because it is only applicable on very large transfers. The estate tax credit or exclusion is the amount that can be passed along before the death levy is applied. At the time of this writing in 2020, the amount of this exclusion is $11.58 million. This figure …
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