Estate Tax Protection and Planning
Excessive Taxation Is Not A Foregone Conclusion
Uncle Sam’s Cut
You work your entire life to save and have enough money to comfortably retire – and ideally leave something for your loved ones when you pass away.
During your life you pay all kinds of taxes: income taxes, property taxes, sales taxes, and so on. And at the end, the government still wants to tax you on the assets you have left at your death.
This is known as the estate tax, sometimes called the “inheritance tax” or “death tax.”
The best way to protect your assets and your family’s future from excessive taxation is to hire an attorney who specializes in estate tax planning. We can help you reduce – if not entirely avoid – the federal estate tax burden.
How Does the Estate Tax Work?
Estate tax is totally separate from federal income tax, property tax, sales tax, and every other type of tax you’ve paid during your lifetime.
Estate tax is a tax paid on the net value of all your assets owned at your death.
However, there are fairly sizable exemptions to the estate tax so it is primarily a high net-worth individual or family who is affected.
This said, the estate tax rate is a whopping 40% on your net estate, so if you do have an estate tax problem, we are talking about potentially massive sums of money your estate will owe to the government before a single heir would enjoy a single penny.
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Is The Estate Tax Really Your Problem?
As of 2024, the estate tax exemption for individuals is $13.61 million, and the estate tax exemption for married couples is $27.22 million. Under 1% of estates are affected.
But for those who are affected, there are numerous estate planning strategies available that can greatly reduce the amount owed. We can advise you on the best options for your family.
New York Estate Tax Exemption
The New York estate tax threshold is $6.11 million in 2022 and $6.58 million in 2023. That number will keep going up annually with inflation.
This means that if a person’s estate is worth less than $6.58 million and they die in 2023, the estate owes nothing to the state of New York. New York has a “cliff” that impacts very wealthy estates. If the estate exceeds the $6.58 million exemption by less than 5%, it only pays taxes on the amount that goes over the threshold. If the total value is more than 105% of exemptable amount, taxes are paid on the entire estate.
Here’s an example of how that works: 105% of $6.58 million is $6,909,000 million. If your estate is worth between $6.58 million and $6,909,000 million, you only pay tax on the amount that exceeds $6.58 million. So if your estate is worth $6.73 million, your taxable estate is only $150,000. If your estate surpasses $6,909,000 million, all of your estate is taxable. If your total estate is $6.75 million, for example, you will pay estate taxes on all of that.
Advanced Estate Planning Strategies
Families with high-value estates face several complex legal and tax issues – estate tax is only one of them.
We offer a number of advanced estate planning strategies that are aimed primarily at reducing a family’s tax burden. In addition to minimizing or eliminating the estate tax liability, we also help you leverage the advantages of gift tax and generation-skipping tax to pass assets on for successive generations without risk of a tax liability decimating your estate at each generation.
Some of our most popular advanced estate planning tools and strategies include:
Protecting Your Estate During Your Life And After You Are Gone
You have worked hard to build your family’s wealth and legacy, so it makes sense to put similar effort into protecting those assets after you are gone.
This includes protecting your assets against excessive taxes.
At your Family Wealth Planning Session, we can go into detail about how you can minimize the potential tax burden faced by your family so that you can maximize the inheritance you pass on to your loved ones.
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