Surveys are conducted periodically, and they consistently find that most American adults are not appropriately prepared from an estate planning standpoint. One of the reasons for this inaction is the notion that estate planning boils down to the execution of a last will. You can do that when you are a senior citizen, right?
This is a gross oversimplification on numerous different levels. First of all, people of all ages pass away, and every responsible adult should have an estate plan.
Secondly, the notion that a last will is the only thing that you need to think about is also mistaken.
There are estate taxes to take into consideration, and a last will does nothing to provide estate tax efficiency. We have a federal estate tax, and it carries a 40 percent top rate that can heavily impact your legacy. It is applicable on asset transfers that exceed $5.43 million at the present time.
If you live in the state of New York, you also have to contend with a state-level estate tax. For the time being, the exclusion is considerably lower than the federal exclusion, so you can be exposed to the state-level estate tax even if you are exempt from the federal tax.
However, there is a bit of relief coming at the beginning of April. The parameters of the New York state estate tax are going to change incrementally over the next several years. On April 1st of each year, the estate tax exclusion is going to rise by $1.0625 million. For the rest of the month of March, the exclusion stands at $2,062,500, but it is going up to $3.125 million on the first day of April.
These annual increases will continue through 2017. At that time, the New York State estate tax exclusion will reach $5.25 million. When the new year arrives in 2019, the state level estate tax exclusion will be adjusted to equal the amount of the federal estate tax exclusion that is in place at that time.
Estate Tax Efficiency
If you are exposed to the federal estate tax, the state level estate tax, or both, action is required. There are steps that you can take to preserve your wealth and keep a maximum store of assets in your family. The ideal course of action will vary depending upon the circumstances.
Our firm would be glad to assist you if you would like to discuss your unique personal situation with a licensed professional. We offer free consultations, and we can answer your questions, become apprised of your objectives, and help you move forward if you would like to put a tax efficiency plan in place.
To set up an appointment, send us a message through our contact page: Smithtown NY Estate Planning Attorneys.