Estate taxes can be a complicated subject especially as they are often a discussion in public policy. Approximately 0.2% of US adults who passed away in recent years owed estate taxes. In 2022, the estate tax is only triggered by those people who have an estate with assets in excess of $12.06 million.

Estate taxes will be charged on the fair market value of a person’s assets when they pass away if their estate is larger than this amount. This is why many people take an opportunity to consider all of their different assets by creating an inventory list and discussing their planning options with an estate planning lawyer.

For calculating estate taxes, this begins with totaling the fair market value of assets like insurance, securities, real estate, annuities and business interests to determine the gross estate. Not all assets are included in a gross estate, such as life insurance policy proceeds so make sure to subtract those. There are also allowable deductions for items excluded from estate taxes, such as funeral expenses, state administration taxes, property that passes directly to surviving spouses and more.

Then consider the value of lifetime taxable gifts to your taxable estate beginning with any gifts made in 1977 and subtract the estate tax base. As you can see, it can be very complicated to figure out if your estate qualifies for estate taxes and how much it could really impact the value of everything inside. Even if you do not have enough assets inside your estate to trigger the estate tax, it can be valuable to work with a knowledgeable estate planning attorney to create a customized plan.

Estate taxes don’t apply for the vast majority of estates in the United States, however, there are 17 locations with their own inheritance and estate taxes. A report from the Internal Revenue Service reveals tax data from the year 2020 showing that over 1200 taxpayers ended up owing estate taxes to the tune of $9.3 billion after state death tax deductions and allowable deductions.

Verifying that you have a taxable estate should prompt you to contact an experienced and knowledgeable estate planning lawyer. There are many different strategies that you can use to minimize your estate planning and tax obligations at the time that you pass away, but it does require advance work with the support of an experienced and knowledgeable lawyer.

New Jersey came in at number 11 on the top 15 list with 92 people who had gross estates of over $2 billion total and a net estate tax of $142.8 million. If you haven’t yet taken advantage of estate planning strategies, schedule a consultation with a lawyer now.

With many possible changes on the horizon with federal estate tax rules and limits, you’ll want to be in touch with a legal team who can keep you informed about these issues and help you navigate many any required changes to your plan. With so many aspects to think about, a lawyer’s insight can help cut through some of the confusion and allow you to create a custom plan for your family’s needs.

In the United States, you are eligible to tap into something called a federal lifetime exclusion which is a specific dollar amount specified by the IRS that can help to minimize your estate tax liability when a person passes away. The vast majority of people will use their federal lifetime exclusion at death; however, you are also eligible to make large gifts during your lifetime to exercise this federal exemption. This amount was doubled in 2017 by President Trump to $11.7 million per person. This, however, is not permanent so this could be reduced by as much as 50% by the end of 2025.

Although this is not yet confirmed, many people anticipate significant changes related to estate taxes and limits such as this. Many taxpayers could benefit from giving away their assets during their lifetime and one such tool to accomplish this is known as spousal lifetime access trust. Most estate planners are carefully watching what might happen with estate tax shifts so that they can inform their clients promptly.

Since federal and state changes can happen at anytime, but particularly around a major shift in the White House or Congress, it’s smart to have a relationship with an estate planning law firm so that you have resources to turn to. Ensuring that your plan aligns with your current needs is key.

You can gift assets into a trust, use most of the federal lifetime exemption during the course of your life and leverage other powerful estate planning benefits. You’ll want to work directly with an experienced attorney to accomplish this because there are many complex aspects to establishing a spousal lifetime access trust.

The IRS recently announced their 2019 details about gift tax and estate tax limits. The official limits for 2019 increased the individual estate and gift tax exemption to $11.4 million per person up from $11.18 million in 2018.

This means that you are eligible to pass on up to $11.4 million to beneficiaries and heirs without paying any federal, estate or gift tax. This also means that a married couple can pass on as much as $22.8 million with appropriate shielding strategies recommended by an estate planning attorney. The annual gift exclusion will stay the same at $15,000. 

These numbers represent numerous planning opportunities for the wealthy and even if you don’t currently have a taxable estate, you’ll still need an estate plan. Scheduling a consultation with an experienced estate attorney is important because the affluent must still continue to plan around the estate tax.

Advanced strategies might be required for someone who is unfamiliar with the estate tax laws or who has recently come into a large amount of money. In all of these situations, a consultation with an experienced estate planning attorney can make a big difference.

Has your life changed at all in the last year? Did you have estate plans contingent on prior versions of tax law that are no longer relevant? Don’t let the end of the year pass you by without taking the opportunity to set up a quick meeting with your accountant and your lawyer. These two professionals help you figure out what’s no longer needed and what additional plans need to be incorporated into your big picture to get things done. 

As the calendar begins to get closer to a new year, it’s a good idea to schedule a consultation with your estate planning attorney. Furthermore, you should sit down and review all of your important documents to make sure that everything is up to date and reflects your individual needs and concerns.

Many people might want to make changes to their health care and advanced financial directives in the future. Common questions that people ask regarding updating or creating your estate plan have to do with planning for a possible nursing home stay and how to leverage tax advantages. Whenever changes have occurred in your family, this can be a source of great celebration or even mourning.

Many people can easily overlook the process of going through your estate planning documents because it can be difficult to confront your own mortality or it can be all too easy to forget the various complexities associated with estate planning and how your plans must be updated and altered as a result of changes in your life, such as the birth of a child or grandchild, separating from a former spouse, deciding to go through a divorce, getting remarried to a new spouse who has a family of their own or incorporating long term wealth and asset protection planning techniques.

The support of a knowledgeable estate planning attorney is instrumental in approaching this process and ensuring that all aspects of the plan have been carefully considered.