Estate planning is the implementation of financially efficient strategies to facilitate your wealth transfer goals. This includes estate tax minimization strategies, gifting strategies, charitable giving strategies, business succession planning, special needs planning, and risk management.
We work with highly skilled estate attorneys to draft basic legal documents such as wills, power of attorneys, and health care proxies or living wills, as well as more advanced estate planning documents such as revocable living trusts, irrevocable trusts, legacy trusts, credit shelter trusts, qualified terminable interest property (QTIP), and qualified personal residence trusts (QPRTs).
Our CERTIFIED FINANCIAL PLANNER™ professional will create a customized financial plan for each family that is designed to ensure that investments are allocated appropriately based on your goals and risk tolerance; to determine if life insurance and long-term care insurance can be used to maximize the transfer of wealth to the next generation and manage risk; to project cash flow requirements based on different life expectancy scenarios; and to review beneficiary designations and asset titling.
Our starting point for this service begins with calculating the value of your gross estate. Your gross estate includes everything you own: real estate, retirement accounts, business interests, life insurance proceeds, and personal property. Although many clients are aware of the federal estate tax and the current federal exemption of $5,120,000, many still fail to realize that most states also impose an estate tax. In many cases, state estate taxes are greater than those at the federal level.
The Impact of State Estate Tax
A married couple living in New York with a gross estate of $3M would not incur any federal estate taxes since the value of their estate falls below the federal exemption of $5.12M. In New York, however, the state exemption is only $1M, causing this couple to have more than $2M subject to state estate taxes and a potential tax bill in excess of $75,000.
That same couple, if living in New Jersey, would be subject to state estate taxes in excess of $120,000, as New Jersey’s exemption is only $675,000.
If this couple has a large portion of their assets in real estate, a business, or property, their heirs will be forced to sell the assets to pay the taxes or to use up the only liquid assets to maintain those assets.
After we calculate the value of your gross estate and your potential federal and state estate tax liabilities, we create a plan that meets your personal goals and maximizes the preservation of your assets. We consider income tax consequences to ensure that estate planning techniques such as gifting don’t cost you or your heirs unnecessarily.
The required tax filings relating to estate and gift taxes include:
- Preparation of Federal and State Estate Tax Returns (Form 706)
- Preparation of Federal Gift Tax Returns (Form 709)
- Preparation of Trust Returns (Form 1041)
- Preparation of Estate Income Tax Return (Form 1041)
If your estate plan includes gifting and trusts, we prepare those annual filings for you routinely. During the difficult time after the loss of a loved one, we guide you step by step from retitling assets to obtaining values for reporting. We complete the returns and assist you with the distribution of assets after all taxes are paid. We conclude this process by making our tax services and financial planning available for the heirs to assist them in managing the assets inherited as well as discussing their estate plan.