How the Tax Reform Affects Your New York Estate PlanMonday, April 23rd, 2018, 3:38 am
When we hear about tax changes, we almost always first think of how it affects our income. However, income isn't the only thing that a new tax plan can influence. In fact, tax reforms can also have an impact on your estate plan.
If you expect to leave behind a large amount of money or assets after you pass away, you might be subject to an estate tax. However, Trump's reform has increased the estate tax exemption and gift tax, bringing the cap to $11.2 million for one individual and $22.4 million for a married couple.
For most individuals, these changes won't influence your estate plan. But let's take a look at what it means for those it does apply to.
The New Tax Reform and Your Estate Plan
The estate and gift tax exemption is a total amount of money you can give away through your estate plan without needing to pay tax. With the reform, you can now gift away more money without being subject to federal taxes.
However, this new law only applies until the end of 2025. If you believe you'll live past 2025, this reform change won't mean very much to you.
Additionally, this reform only applies on a federal level. States, including New York, still have estate tax exemptions that are much lower than the $11.2 million or $22.4 million. This means you'll still need to pay state taxes if your estate plan is above New York's estate tax limits.
You can, however, still follow the $11.2 million or $22.4 million for gift tax, as New York does not have a state gift tax. You can also put this money into a tax-proof trust, preventing you from needing to pay either state or federal tax on the money when you pass away.
Whenever you create an estate plan, you want to work with an expert attorney who can help you find the best way to manage your assets. If you're in the Brooklyn area, Michael F. Kanzer & Associates is right for you. We can walk you through creating an estate plan that accounts for both federal and state taxes. Contact us today for a free consultation.