Moorestown Estate Tax Planning Lawyer
Moorestown Estate Tax Planning Lawyer
Taxes can take a big bite out of any estate, reducing the amount of money your loved ones inherit. But taxes can cause even greater problems—such as a forced sale because your heirs do not have enough cash to pay taxes when they come due. Poor estate planning can jeopardize your family’s continued ownership of certain assets.
At Scott Counsel, P.C., our Moorestown estate tax planning lawyer works closely with our clients to better understand their estates and how the tax code impacts them. We rely on our detailed knowledge of the law to structure an estate in such a way that taxes are minimized and greater control is assured. Please contact us today to learn more.
How Taxes Impact New Jersey Estates
The state of New Jersey has thankfully phased out its estate tax so that it no longer stands out like a sore thumb compared to the rest of the nation. Now an estate, regardless of size, can pass without any state estate taxes being due.
Nevertheless, other taxes might still apply to estates and those who inherit them:
- Inheritance taxes. Someone in New Jersey could owe inheritance taxes unless they were closely related to the deceased, such as a parent, spouse, child, or grandchild. A neighbor who inherits from you, for example, could still pay this tax.
- Federal estate taxes. The estate tax applies to all estates, though married couples can exempt up to $24.12 million and individuals $12.06 million. This amount changes annually but will revert to a lower amount in 2025.
- Capital gains taxes. Capital gains taxes can be minimized by taking advantage of the step-up in basis provided if you leave assets to loved ones in a will.
Estate planning must keep up with changes in both state and federal law. Any transfer of property or cash during life or at death has tax consequences that you should be aware of: gift tax, estate tax, or generation-skipping transfer tax could all apply.
How to Minimize Taxes
Even someone of relatively modest means will be interested in how taxes impact their estate. Our attorneys carefully discuss your options so that you make the right choice. Some ways we can minimize a tax bill include:
- Lifetime gifts. This is an easy way to reduce the size of an estate at death. You give assets to a loved one, usually a child. Fortunately, the gift tax exemption allows many of these transfers without having to pay a gift tax. Consequently, your loved one receives the gift tax-free and your estate is reduced in size.
- Private annuities. One technique is to sell an asset to a family member or other third party and then get lifetime income in return. The gift tax does not come into play since the asset is sold, not gifted. A client’s estate is also reduced since the title is transferred.
- Charitable giving. Any gift to charities is exempt from estate and gift taxes. Our legal team can create a charitable trust to reduce the size of your estate while providing for a deserving charity. Trusts can also be structured so that our clients receive income during life, with the remainder going to a charity at death.
- Trusts. Other trusts can reduce the amount of taxes owed on an estate. Moving assets into the trust take them out of the probated estate and reduce tax exposure. There are many trusts available to accomplish your goals, so discuss with an attorney what is the best option.
- Life insurance. The beneficiary to a life insurance policy typically does not need to pay taxes on their benefits. This is an excellent way for people of even relatively modest means to provide important income to loved ones after death–allowing them to avoid taxes in the process.
- 529 college savings plan. Parents and grandparents can create these accounts to finance a child’s education. Pre-tax contributions are invested and grow tax-free. Any withdrawals are also tax-free if used for approved purposes such as college tuition. A 529 college savings plan started when a child is young can grow to a considerable size and represents an excellent tax-savings opportunity for both our clients and their loved ones.
Depending on your financial situation, other planning techniques might be available to reduce or eliminate certain taxes. Contact a Moorestown estate planning lawyer today to get started.
Estate Tax Planning is Not a One Time Event
It is never too soon to begin estate planning because no one can predict the future. Even someone in his 30s could suffer a fatal accident or receive a terminal diagnosis. The best time to create an estate plan is when you are of sound mind and not rushed, thereby allowing full consideration of all options.
Once created, however, estate plans often require updating. There are many reasons to revisit a plan, such as marriage, divorce, remarriage, or the birth of children or grandchildren.
When it comes to estate tax planning, we also must consider changes to your estate: you might have gained or lost considerable assets over the years. An estate worth only a few thousand in your 30s could now be worth millions of dollars as you approach age 60. Your estate planning needs will change since some of this wealth could be subject to taxes.
Another key consideration is that tax law is always changing. The most recent changes in 2017 increased the amount a person can be exempt from gift and estate tax. However, the amount will revert in 2025. And a new Presidential administration could also seek changes immediately, throwing into doubt even the most careful estate plans.
Reap the Benefits of Estate Tax Planning
Estate planning not only saves money in the long haul, but it provides peace of mind to our clients who know they will preserve as much of their estate as possible for their loved ones. To learn more about estate tax planning or to schedule a consultation with a lawyer, please call (856) 281-3131 today.
– When my son, who has Cystic Fibrosis and CF related diabetes, was suddenly and unexpectedly removed from his Medicaid program, we were devastated and frightened not knowing where we would get the resources to pay for his extremely high priced prescriptions. Justin was the attorney who handled our case. From the very beginning, he proved to be very thorough and experienced with navigating the process of reversing the Medicaid decision. However, it was his apparent kind, caring nature that made us feel the most at ease. Justin was successful in securing a continuation of benefits for my son, and we are extremely grateful for having his expertise during this most stressful ongoing process. Thank you, Justin!
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