Living trust attorneys at Mark S. Eghrari & Associates, PLLC can provide personalized help with the creation of an estate plan that includes tools like trusts to offer you advanced options for controlling your legacy. Trusts are a versatile and powerful legal tool that can help to protect your assets in important ways. However, there are also some limitations associated with trusts that you should be aware of.
One common type of trust is a living trust. A living trust provides important protections for assets and can be used to accomplish many goals including avoiding the probate process.
However, there are also some misconceptions about what a living trust can do. For example, because a living trust makes it possible for assets to transfer outside of the probate process, many people believe that a living trust will allow them to avoid estate tax. Unfortunately, this is not true and if you want to ensure your estate does not have to pay a big tax bill, you will need to work with an experienced attorney to find alternative ways to avoid the taxes that your death could potentially trigger.
Mark S. Eghrari & Associates, PLLC can help you to make a comprehensive plan to reduce or avoid estate tax that you could owe, so give us a call today to talk with living trust attorneys at our firm who can help you.
Does a Living Trust Allow You to Avoid Estate Tax?
Although a living trust makes it possible for you to transfer assets outside of the probate process, the assets that are held within the living trust could still be considered to be a part of your taxable estate. This would mean that when you pass away, your estate may need to pay a big tax bill if your estate is large enough that it does not fall within the exemption.
Estate tax can be charged by the New York State government. Estate taxes could also be charged by the federal government. However, the federal government has recently made the threshold at which your estate becomes taxable larger. This change occurred during tax reform at the end of 2017 and it means that, when the new estate tax threshold goes into effect, far fewer people will find their estates must pay estate tax to the federal government.
The state of New York, however, has a lower threshold than the federal government’s revised rules. This means the state sets different limits regarding when an estate is considered to be taxable or not. You could easily end up with your estate owing nothing to the federal government because your estate is small enough to fall within a federal exemption but at the same time owing a lot of money to the state of New York.
Unfortunately, under neither New York law nor federal law will you be able to avoid estate tax by transferring assets through a living trust. There are, however, other techniques that you could make use of instead in order to try to transfer assets to loved ones while reducing or avoiding estate tax. Your best course of action would be to work with an experienced attorney who deeply understands the complexities of estate tax rules and who has extensive experience helping people to make plans to avoid estate tax after their death.
The fact that a living trust doesn’t allow you to avoid estate tax does not mean a living trust doesn’t make sense, as there are many other significant benefits to creating a living trust. An attorney can guide you through the process of finding ways to ensure your heirs or beneficiaries get the maximum value of trust creation.
How can Living Trust Attorneys Help You?
Living trust attorneys at Mark S. Eghrari & Associates, PLLC can provide the personalized assistance that you need when you determine if you should create a trust and when you evaluate the type of trust that should be created in light of the benefits that each trust provides. To find out more about how our firm can help you with all aspects of trust creation, join us for a free seminar.
You can also give us a call at (631) 265-0599 or contact us online at any time for help with the process of making an estate plan aimed at avoiding estate tax, protecting your legacy and providing for your heirs or beneficiaries. Give us a call today to get started.