Estate Planning Lawyer

The most basic plan you can put into place to reduce estate tax is to adopt a Credit Shelter Trust or Bypass Trust Plan. Simply stated, this plan creates a Credit Shelter Trust, also known as a Bypass Trust, in each spouse’s will, to utilize that spouse’s full exemption amount. The surviving spouse has access to the funds in the trust, yet the trust funds are not included in the surviving spouse’s estate on his or her death. For individuals with larger estates, there are many more tax planning opportunities available that we would be happy to discuss with you when you come in for a consultation.

You can make annual gifts to your children and other beneficiaries of $15,000 per individual, without having to file a gift tax return or pay gift tax. This means that a married couple can gift $30,000 to each child and grandchild, annually. You may gift more than $15,000 to an individual, but you will not have to pay gift tax until you have exceeded your lifetime exemption amount. In 2021, the federal gift, estate and generation skipping transfer tax exemptions are set at $11,700,000, indexed for inflation.  This means that a couple can pass wealth of $23,400,000 over their lifetime to their heirs free of federal gift and estate tax in 2021.  New York State does not impose a gift tax but will add gifts made within 3 years of death into the New York State estate tax base.

A Will allows you to decide who is to receive your property when you die, and how much each person is to receive. Your will appoints an Executor, who will oversee everything and distribute your property to the individuals you have named.

If you die without a Will, your property will be distributed to your heirs according to New York intestacy law. If you have a spouse and children, your spouse will receive $50,000 plus one-half of your property and your children will receive the other one-half of your property.

A Disposition of Remains Appointment is a legal document that appoints another individual to make funeral and burial arrangements for you, and contains your wishes with regard to such arrangements.

A Health Care Proxy is a legal document that appoints another individual to make health care decisions for you when you are unable to make them yourself. This document may be combined with a Living Will, which contains your wishes with regard to end of life care.

A Power of Attorney is a legal document that appoints another individual, called your agent, to handle your financial and other matters for you when you are unable to handle them yourself.

A Revocable Living Trust is a trust that you establish during your lifetime. You are the trustee and beneficiary of your own Revocable Living Trust. The primary reason for establishing a Revocable Living Trust is to avoid probate.

A trust is an agreement between you and another individual, called the trustee. The trustee holds the property, manages the property, and makes distributions to the individuals named in the trust, also called the beneficiaries. You can be the trustee and beneficiary of your own trust, or you can name other individuals to be the trustee and beneficiary.

An estate tax or “death tax” will depends on the size of your gross estate and year of death. A federal filing is required for estates with combined gross assets and prior taxable gifts exceeding $11,700,000 in 2021, with a maximum tax rate of 40%. In 2021, New York State imposes an estate tax on estates worth over $5,930,000, with a maximum tax rate of 16%. New York State does not impose a gift tax but prior taxable gifts made within 3 years of death will be added back into the New York State estate tax base and if your New York State estate tax base exceeds $6,226,500 (including prior taxable gifts made within 3 years of death), there is no exemption and New York State will tax every dollar of value in your estate.  If your estate is close to these asset thresholds, Estate Tax Planning may help to reduce, or even eliminate, the tax due upon your death.