Besides saving property taxes, what should be on your estate planning checklist? | Rivkin Radler LLP

Lloyd Harbor Life – July 2022

Federal estate tax exemption provisions are set to expire at the end of 2025, which could force more people to pay estate taxes. Given the uncertainty of estate tax laws, it is important to have estate planning documents that are flexible enough to adapt to changing estate tax laws.

Generally, the amount of the exemption is the value of the assets you can give to your heirs before any inheritance or gift tax is due. The federal estate tax exemption is now $12.06 million per person ($24.12 million/couple); the New York State estate tax exemption is now $6.11 million per person. Note that although current New York law does not impose gift tax, it does include taxable gifts you make within three years of your death in your New York taxable estate.

Some may believe that if the value of their assets is below the exemption amounts, there is no need to engage in estate planning. The current federal provisions, however, will revert to $5 million (indexed to inflation) by the end of 2025. What New York will do on the estate tax exemption front is a guessing game. ; not so long ago, this exemption amount was only $1 million.

In addition to considering estate taxes, there are many non-tax considerations that should be addressed in estate planning documents, including:
1. Make sure your spouse is adequately provided for;
2. Make sure your intended beneficiaries get what you want them to get;
3. Address the issues of second marriages and children from a previous marriage;
4. Avoid probate if there could be probate problems in the particular circumstances;
5. Provide trusts for adult children and grandchildren to protect them against claims by their creditors (eg, divorce) or against themselves or others who may try to influence them;
6. Provide trusts for the property of a minor to avoid the cost and hassle of appointing a guardian of property for them;
7. Provide trusts to beneficiaries with special needs to avoid exclusion from government benefits;
8. Appoint executors and trustees to make decisions about your assets after your death.
9. Update your Power of Attorney and Health Care Power of Attorney to ensure you have appointed the attorney(s) you wish;
10. Check the title and beneficiary designations on all your accounts (eg, spouse or transfer on death), including your retirement accounts and life insurance policies.

As noted, it is important to approach your estate planning for both tax and non-tax purposes.

This article first appeared in the July 2022 issue of Lloyd Harbor life.

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