New York Probate and Estate Administration Blog

At the end of 2010 congress revamped the estate tax and generation skipping tax legislation. This saw all of the different types of death related taxes being filed with the highest rate of 35%.
At the moment the exemption rates are very generous and this is thought to continue throughout 2012. However, in 2013 it’s likely that things will be changed. That’s why many New York Probate Lawyers are starting to tell their clients about the possibility of gifting now.
The portability of the gift tax exemption means that a married couple actually has double the amount of exemption. The $5 million lifetime gift tax exemption for individuals is $10 million for a married couple. In 2010 the gift exemption was only $1 million.
So many people are asking their Lawyer whether they should start giving away as many of their possessions to their children before 2013 and the exemptions are reduced. This would serve to reduce the inheritance taxes explains the New York Probate Lawyer.
These lifetime gifts will help to reduce the size of your estate which will in turn mean that less tax will need to be paid. They will also earn interest at their capital gains tax rate which could be beneficial.
If you do want to use the portability of these exemptions then you will need to file an estate tax return. This is important even if there is no tax owing. This will also serve to notify the IRS that you will transfer the gift tax exemption to the surviving spouse.
The estate tax return needs to be submitted 9 months after the death, although it may be possible to extend it by six months in some circumstances.
The savings could be very high if you start gifting assets now. However, the problem is that there’s no indication what will actually happen in 2013 in sites like Suffolk and Westchester Counties. Congress could continue with the $5 million individual exemption into 2013, nothing is sure. However, if congress reverts back to $1 million lifetime gifting limits then you would have saved a lot of money.

Continue reading "Estate Planning in 2011" »

In spite of the stone-throwing and partisan pandering of last December’s revamp of US tax law, a New York Estate Planning Lawyer claims that there are a few hidden gems for families willing to dig through the rubble.

In particular, the New York Probate Lawyer singled out the new gift tax laws as a boon for those in high tax brackets.

The gift-tax exemption, the much maligned cap on individual giving, which has long been set at what some would consider a paltry one million dollars, has been raised dramatically for the next two years to the princely sum of five million dollars for individuals- or a whopping ten million dollars for individuals. Accountants in Nassau and Suffolk Counties are studying the new law and trying to find ways to help their clients.

The result of the new law is that wealthier families can now gift up to five (or ten) million dollars, before even a cent of federal taxation kicks in. Once over the federally allowed limit, givers still only face a 35 percent government tax, far lower than the previous 55 percent rate, reported the New York Estate Planning Lawyer.

In the wake of the change, families are rearranging their estate plans to take advantage of the two year opening. There is a great deal of uncertainty as to whether the tax reduction will be renewed beyond the initial two year period. Two years is generally regarded as a relatively short term for an estate tax law. The previous law was instated for a decade, before being ushered out in 2010. Some Estate Planners are heralding the move by Congress as the beginning of the end of the estate tax.

Continue reading "New Tax Law Could Benefit the Rich" »

Many senior citizens got an unpleasant surprise this February. Pensioners and seniors who rely on federal benefits to make ends meet were hit with the harsh new reality of the federal financial landscape when they discovered that their social security checks had been decreased. Although some were warned about the change in a letter that came with their check, many were left guessing.

We spoke with a New York City Estate Planning Lawyer, who explained the recent change in benefits. The reduction in the payout for senior citizens was an indirect result of the new tax relief act, which was enacted in tax year 2010. The new tax relief act cuts social security taxes for those still in the workforce, which federal economists hoped would help stimulate the economy by giving those who are still contributing to the marketplace more expendable income.

In order to make room for the new cuts, which according to the New York Estate Planning Lawyer amount to approximately a two percent drop in collected income by the IRS, the federal income taxes for those who are not working were raised, effectively lowering the payout for retirees and others who depend on social security benefits. Lawyers in Nassau and Suffolk Counties must be aware of these and any other changes that come down and effect Estate Administration.

Whether the raise in the tax rate for those receiving government assistance continues beyond the next few years is anyone’s guess, said the New York Estate Planning Lawyer. He further suggested that the best way to avoid getting caught in the crunch is to carefully review your finances with a qualified professional.

Continue reading "Tax Law Expires Leaving Elderly at Risk" »