A fundamental technique utilized by estate planning professionals to limit both Federal and New Jersey estate taxes involves the use of marital trusts.
What is a Marital Trust?
A marital trust allows a portion of a spouse’s estate to support the surviving spouse, but exclude certain assets from being included in the surviving spouse’s estate. A carefully crafted and funded marital trust will thus save the surviving spouse’s estate from significant estate tax liability
Although estate assets are also shielded by an unlimited spousal exemption, far too few people in New Jersey consider the impact of New Jersey estate taxes when both spouses ultimately die and leave their combined estates to the couple’s children. For example, if the husband dies his estate will pass to the wife tax free under the marital exemption. When the wife ultimately dies, however, her estate which is comprised of both her and her husband’s assets will then pass to the couple’s children. If the combined estates of both spouses exceed $675,000.00, New Jersey will assess an estate tax on transfers to the couple’s heirs. The failure to consider the tax consequences on the “second spouse to die”, coupled with the misconception regarding the inclusion of non-probate assets in the gross estate often lead to the payment of estate taxes which could have been avoided through effective estate planning.
At Sedita, Campisano & Campisano, we provide effective estate planning to suit your family’s needs. We are experienced in drafting and funding marital trusts which can minimize the amount of Federal and New Jersey estate tax liability.
Call us today to find out how an estate plan can leave more of your assets in your family’s hands and less in the hands of the IRS.