Estate planning should be viewed as an ongoing process. The estate plan that you initially create is going to be based on the circumstances at that time. As the years pass, your own life situation can change, and relevant laws can change as well.
Federal Estate Tax
The federal estate tax carries a 40 percent maximum rate, so it can significantly reduce the value of your estate if you are exposed. In 2015, the federal estate tax exclusion is $5.43 million. This is the amount that can be transferred before the estate tax would be applied.
We should point out the fact that the tax is not applicable on asset transfers between spouses, regardless of the amount that is being transferred.
If you were to put your estate plan in place this year when the exclusion is $5.43 million, you may not take any steps to gain estate tax efficiency if the value of your estate does not exceed this amount.
However, tax laws are subject to change. In fact, the White House has proposed reductions to the amount of the exclusion on multiple different occasions. If they had been adopted, these proposals would have reduced the exclusion to $3.5 million.
New York Estate Tax
The federal estate tax is just one of the death taxes that you have to contend with as a resident of the state of New York. In our state, there is also a state-level estate tax, and there have recently been changes to the state-level estate tax exclusion.
For the rest of 2015, the New York state estate tax exclusion is $3.125 million, so you could be exposed to the state-level estate tax even if you are exempt from the federal tax.
The New York state estate tax exclusion is going to go up by $1.0625 million on the first of April each year until 2017. At that time, the New York exclusion will be $5.25 million.
On New Year’s Day in 2019, it will go up to match the amount of the federal estate tax exclusion that is in place at that time.
Learn More About Death Taxes
If you would like to obtain some in-depth information about death taxes, download our special report. This comprehensive report is free, and you can access your copy quickly and easily through this website.
To get your copy of the report, visit this page and follow the simple instructions: Estate Tax Report.
We regularly update this blog, and you can visit us often if you would like to build on your knowledge. However, we also contribute content over at Forbes.com.
To access these articles, visit this page: Forbes Contributor Mark Eghrari.
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