Avoiding Estate Taxes
One of the greatest destroyers of inherited wealth is the estate tax. However, it doesn't need to be. The estate tax is the most voluntary tax in the U.S. tax code. With good planning and the use of trusts, wealth can be preserved for generations to come.
At the law firm of Avelino Nitkewicz LLP, our lawyers provide efficient and affordable estate tax planning for clients in Summit, New Providence, Madison and other communities in north-central New Jersey, New York City and all of its surrounding suburbs.
When Do Estate Taxes Apply?
The current federal estate tax rate is currently 45 percent for estates exceeding $3.5 million. New Jersey also assesses a progressive inheritance tax on estates exceeding $675,000. The estate tax rates and the size of the estate to which they apply are subject to change in the future.
The best way to minimize estate taxes is through the use of trusts. Placing money in a trust removes it from the estate for estate tax purposes. Examples of trusts include:
- Dynasty Trusts: A dynasty trust allows money to stay within a family for generations while being protected from estate tax, creditors and divorce.
- IRA Trusts: Money placed into an IRA trust will continue to grow outside of the estate on a tax-deferred basis, creating wealth that will last for generations.
- Irrevocable Life Insurance Trusts: Any life insurance policy that is worth more than $250,000 should be owned by an irrevocable life insurance trust. While life insurance proceeds are not taxable, they are included in your estate and could result in the need for your heirs to pay state and federal estate taxes. Placing life insurance proceeds in a trust removes the money from the estate.
Gifting and asset transfers can also be used to eliminate estate taxes. Our firm is dedicated to reviewing your unique financial and tax situation, and using this information as a guide to develop and implement a complete planning strategy using our knowledge of trusts, wills, and estate planning, as well as tax and business law.
The most effective estate tax planning is done when both spouses are alive. However, there are things our lawyers can do to eliminate or at least minimize estate taxes at any time.
Free Lawyer Consultation
For more information about estate tax planning or to schedule a free initial consultation with an attorney at Avelino Nitkewicz LLP, call 888-334-7310 or fill out the contact form on this Web site.
