You need to understand exactly what you have to pass along to your loved ones. This can seem self-evident when you are creating an inheritance list, but there is another reason why you need to know exactly where you stand when you are devising your estate plan.
Estate taxes can significantly reduce the wealth that you are passing along to your loved ones. Citizen spouses can transfer unlimited assets between one another tax-free, but transfers to others are potentially taxable.
The federal estate tax exclusion is $5.43 million. You can transfer this amount tax-free, but transfers to anyone other than your spouse that exceed this amount are subject to taxation. The maximum rate of the federal estate tax is 40 percent.
We practice law in New York, and there is a state-level estate tax in our state. Until April of next year, the New York state estate tax exclusion is $3.125 million. It is scheduled to go up by about $1 million per year until it eventually matches the amount of the federal estate tax exclusion.
If you find that your estate is in taxable territory, you can be proactive about the implementation of the estate tax efficiency strategies.
Each person on your inheritance list is a unique individual. The life situation of each inheritor is something that you should take into consideration when you are putting your estate plan together. Do you have spendthrift heirs? Do you have a disabled love one who is enrolled in government benefit programs? Are some of your heirs likely to be minors when you pass away?
The best way to provide for one person may not be suitable for the next, and you should be well aware of this when you are engaged in your planning efforts.
When you are devising your estate plan, you should consider the potential impact of long-term care costs. Medicare does not pay for living assistance, most people will need it, and nursing homes and assisted living communities are very expensive.
Long-term care costs could consume much of what you intended to leave behind to your loved ones if you have to pay out of pocket. However, there are nursing home asset protection strategies that can be implemented, and you should understand them thoroughly when you are devising your plan.
We Can Help
If you have estate planning questions, we can provide you with answers. To schedule a no obligation consultation, send us a message through this page: Smithtown NY Estate Planning Attorneys.