Your guide to gifting – advice from New Jersey estate planning attorneys

Gifting, in the context of estate planning is one of the most effective means of reducing estate and inheritance tax, yet many people are unsure of how it all works. As elderly law and estate planning attorneys in New Jersey we can shed some light on the key benefits and features of gifting.

In  New Jersey, gifting has become even more important as it is one of the few states that impose a state estate tax in addition to federal estate taxes on people who live in New Jersey, own property here or are leaving property to an inheritor who is not a close relative.

The annual exclusion gift amount is determined each year by the Internal Revenue service (IRS). In 2015, this amount is $14,000 and it can be given freely to as many family members or friends as you would like without impacting on the lifetime fit exemption. Spouses can also combine this amount into donations of $28,000 per gift per person.

The federal lifetime gift tax exemption is an amount the IRS determines year by year that an individual can leave their inheritors without being subjected to federal estate tax. This year it is set at $5.34 million and, because it is determined on an individual basis without regard to matrimonial status, a husband and wife will each get their own exemption. By tracking this sum, you can make the most of lifetime giving opportunities as well through a dedicated trust by increasing the gifts to the trust until they reach the amount determined by the IRS.

Other ways of utilizing gifting include donations towards medical and dental expenses for friends and family by paying the provider directly. You can also fund section 529 college plans for children and grandchildren. In addition, this money grows in tax-free accounts and can be withdrawn tax-free as well, providing it is used to fund specific educational and vocational expenses.

It’s important to track your gifting carefully before you commit to any transfers, as exceeding the basic federal exclusion amount/federal lifetime gift tax exemption could mean that your estate ends up owing as much as 40% in taxes.

Knowing exactly when and where to distribute your assets is key to effective gifting – and a comprehensive estate plan managed by experienced attorneys will ensure you are kept up-to-date and in line with state and federal tax regulations. At Sedita, Campisano & Campisano, LLC, we can offer you over 30 years of estate planning experience to give you and your family the best possible results. For more information on estate planning in New Jersey, please contact us today.

Moving states? Here’s how it affects your estate planning

Moving to a different state isn’t just about a change of lifestyle – it also has far-reaching effects on your estate plan. While wills and living trusts should be valid across all states, the laws of each particular state can change particular aspects of estate planning. It’s important to update these documents as soon as you are able, as these differences can significantly change what you would like to achieve in terms of deciding inheritance, reducing taxes and even managing your medical directives.

Estate planning and moving to New Jersey 

New Jersey is an equitable distribution state rather than a community of property state, which does affect estate planning with regards to particular processes such as divorce. Rather than splitting assets 50-50, assets will be evaluated and distributed in a manner seen as fair, but not necessarily equal. If you are moving from somewhere in a community of property state, it is important this change is addressed.

New Jersey also has its own additional estate tax which varies year by year. This year you will qualify for the state tax if the gross value of your estate exceeds $675,000. You will also qualify for the federal tax if the gross value of your estate exceeds $5,340,000. This gross value is inclusive of assets such as property, life insurance, IRA’s, bank accounts and investments so you can exceed the state exemption amount and pay around 10% of the estate value in tax. For people looking to keep as many of their assets as possible to support their family after their passing, it’s important you speak to an estate planning lawyer about implementing a trust that will significantly reduce estate taxes.

If you have an advanced health directive or want to create one, it’s important you speak to an attorney who can walk you through the legal allowances and restrictions set down by the state of New Jersey. This will guarantee your wishes are maintained rather than impeded by legal technicalities. For example, New Jersey state law allows you to create two types of advanced directives, the first being an instructive directive for the medical care and measures you would like to receive and the second a proxy directive which allows a specific person to make decisions on your behalf if you are unable.

In essence, reviewing your estate planning documentation is about guaranteeing your original wishes are adhered to as far as the laws of the state will allow. It insures your documentation is in order and that costly and time-consuming legal technicalities are avoided.

For more information on estate planning and New Jersey estate law or to book an appointment at Sedita, Campisano & Campisano, LLC, please contact us today.

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