One thing that you cannot avoid in life is taxes. What’s more, taxes may also be inevitable when you pass on. This is because your estate may be taxed before your beneficiaries can inherit the assets you left behind for them. Continue reading to learn how to plan for estate taxes and how an experienced New York City estate planning attorney at Zimmet Law Group, P.C. can help you reduce them as much as possible.
How do I plan for estate taxes in New York State?
You may not be charged with federal estate taxes unless you are considered a high-net-worth individual. That is, the exemptions that have been established with federal estate taxes over the years are as follows:
- In 2021, an individual must have had assets valued at $11.7 million or more to be charged with federal estate taxes.
- In 2022, an individual must have had assets valued at $12.06 million or more to be charged with federal estate taxes.
- As of 2023, an individual must have assets valued at $12.92 million or more to be charged with federal estate taxes.
This is not to say that you are also exempted from New York State estate taxes. Rather, as of 2023, if you have assets that are valued at $6.58 million or more, you may be charged with state estate taxes. With this, the New York State estate tax rate may reach as high as 16 percent.
How do I reduce estate taxes?
There is no doubt that you worked hard to allocate your high-value assets throughout your lifetime. And understandably so, you want your loved ones to reap the benefits of your estate as much as possible; and overall ensure that they are financially taken care of when you are no longer around.
For these reasons alone, you must build a comprehensive estate plan that reduces the chances of your assets incurring federal and state taxes. Examples of strategies that you may adopt are as follows:
- You may set up lifetime charitable transfers or gifts to charities so to reduce the value of your estate and therefore reduce your estate taxes.
- You may set up a qualified personal residence trust so that the increase in your home’s value will not be considered when gifted to your beneficiaries and therefore the amount of gift tax will be reduced.
- You may elect to use the special use real estate valuation method so your real estate may be valued for its “actual use” rather than its “highest and best use.”
If estate planning is something you wish to kickstart today, then you must retain the services of a skilled New York City estate planning attorney from Zimmet Law Group, P.C. We await sitting down with you at your initial consultation.
