There are many reasons why estate planning is essential, and one of them is that it is a good wealth management tool as well as offering peace of mind by caring for your family. One of the main focuses of estate planning is formalizing who inherits what assets from your estate, when they can have control over it and even, to some degree, the extent to which they can utilize it. Inheritance through a Last Will and Testament is the traditional means to achieving this, but gifting offers several advantages as well. Here are some insights from your estate planning attorney in New Jersey.
Inheritance tax in NJ and federal inheritance tax
New Jersey has just taken the step of repealing estate tax, which will apply from January 2018, which is great news for anyone looking to preserve their wealth for future generations. For the year of 2017, this exemption has risen from a very low $675,000 to $2 million, and the legislation also eliminates provisions that imposed estate taxes on NJ property of non-resident decedents.
However, the state has not repealed its inheritance tax laws, which is levied on siblings, nieces and nephews (spouses and children are exempt) for inheritance of over $500.
On a federal level, the exemption is much higher at $5.45 million, a figure that can be increased to $10.9 million with professional planning, without hitting the 40% tax.
Using gifting to supplement your Last Will and Testament or Trust
Gifting provides a way for people to pass on their wealth to those close to them without having to worry about facing significant taxation or having to wait until after your passing. 2017’s exemptions from the IRS are at $5.49 per individual with an annual gift exclusion of $14,000.
This allows you to give money to children, loved ones and worthy causes without facing a tax burden as a result, as long as you stay under the $1 million limit, making it an effective supplement to traditional inheritance – even helping to avoid inheritance taxes in some cases. This effectively frees up funds for college educations, a GRAT, contributions to charity or even paying a friend’s medical fees – whatever is closest to your heart. It also allows you to see the fruits of your generosity in person, which is a great reward.
Shield your assets for your loved ones – Speak to your estate planning attorney
If you would like further guidance on how to manage the distribution of your assets, create a trust or draw up a Last Will and Testament, Frank R. Campisano can provide you with the necessary expert legal advice and professional insight into NJ estate planning.
In addition, he can also assist you with all other aspects of your estate plan, from drawing up medical directives to Power of Attorney documents. For more information on setting up or changing an estate plan, please contact the law firm of Sedita, Campisano & Campisano, LLC in New Jersey and visit our website at http://www.scclegal.com/.