In this blog post, we will provide some food for thought that may compel you to educate yourself about the value of estate planning.
The Age Factor
You may assume that you don’t need an estate plan if you are a relatively young adult. In reality, many young adults have huge responsibilities to others, especially young parents.
While it is true that people generally don’t pass away when they are in their thirties or forties, we all know that it does happen. If you fail to take action, you are doing your family members a disservice.
The Time Factor
If you use a last will to state your final wishes, the heirs would not receive their inheritances until after the estate was probated by a court. This can take close to a year, even if the case is relatively straightforward.
There are other options available to you that would facilitate timely asset transfers. The optimal course of action would vary depending on the circumstances.
The Tax Factor
Taxation can enter the picture when assets are being transferred. You should be well aware of the lay of the land so that you can preserve resources for the benefit of your loved ones.
There is a federal estate tax, and it carries a 40 percent maximum rate. This is a significant figure that should certainly get your attention.
To determine whether or not you are exposed to the estate tax, you should compare the value of your estate to the amount of the federal estate tax exclusion. During the current calendar year, the exclusion is $5.43 million. Anything that you transfer that exceeds this amount, unless you are transferring assets to your spouse, is potentially subject to the estate tax.
Here in New York we have a state-level estate tax to contend with as well. As of the first of April, the New York state estate tax exclusion is $3.125 million. When you compare the federal exclusion to the New York exclusion, you can see that it would be possible to be exposed to the estate tax on the state level even if you are exempt on the federal level.
If you are exposed to either or both of these taxes, there are steps that you can take to reduce the burden.
Financial matters are at the core of estate planning, but incapacity planning is also important. Elders often become unable to manage their own affairs due to incapacitation, and there are steps that you can take to prepare for this contingency in advance.
Visit Our Forbes Page
We publish a steady stream of elder law and estate planning information over at Forbes.com. If you are looking for additional information, click this link: Forbes Contributor Mark Eghrari.
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