Providing for your family after you are gone and preserving your legacy is the goal of many estate plans. However, questions about estate taxes often arise, and individuals may wonder how these taxes could reduce their inheritable assets. By understanding Melville estate tax implications, you can make a plan to protect your estate from hefty tax obligations.
Our diligent estate planning lawyers could explain estate taxes, determine which tax laws might apply to your estate, and create a strategy for minimizing taxes. If you are seeking assistance with estate planning, schedule a consultation with the legal team at Tully Law Group, PC.
For Melville residents, it is important to understand the implications of local estate tax laws. Under these laws, estates exceeding a certain amount will be subject to an estate tax. However, only the value above the exclusion amount will be taxed. The amount of tax will depend on the value of the estate.
The estate tax must be filed with the state within nine months of a person’s death. Extensions can be filed if necessary, but they typically may not exceed six months.
When a person passes, their estate may be subject to a federal estate tax. Under federal law, estate and gift taxes are combined. There is a lifetime exemption limit that changes each year. Any amount that exceeds this exclusion limit will be subject to the federal estate and gift tax.
Since the federal estate tax limit changes each year, it is critical for individuals and couples to regularly audit their estate plans. An attorney could help create a plan that anticipates changes to the exclusion limits. This is vital for securing the value of an estate for the beneficiaries.
Besides the lifetime estate and gift tax exclusion, there is also an annual gift tax exemption. Each year, an individual or married couple may give up to the annual exclusion amount in gifts. Gifts under this limit will not be counted towards the lifetime estate and gift tax amount.
Annual gift-giving can be a useful tool for individuals and couples whose estates may exceed the estate and gift tax limits. By giving strategic annual gifts, they can reduce the value of their estate, minimizing estate tax implications in Melville.
Legal counsel could help you determine the best approach for preserving your estate and legacy.
Besides annual gifts, irrevocable trusts are one tool to “remove” assets from an estate. By moving these assets into an irrevocable trust, the assets may no longer be counted towards the taxable estate. However, the trust must be carefully structured.
Life insurance policies and charitable giving are other tools that can reduce a taxable estate. Since the decedent generally cannot access the funds of a policy, and the proceeds will go directly to the beneficiaries, it may not be subject to estate tax implications in Melville. Charitable giving, on the other hand, allows individuals to benefit a cause, reduce their taxable estate, and take advantage of tax deductions while they are alive.
Additionally, a portability election can be a crucial tool for married couples. When one spouse passes, the surviving spouse may “claim” the deceased spouse’s federal exemption amount. By making a portability election, a surviving spouse may claim their spouse’s unused federal estate and gift tax exemption. This can help reduce the taxable estate at the time of the second spouse’s passing.
Local residents should understand how state and federal estate and gift tax laws affect them. By planning ahead, you can preserve your legacy and help your loved ones avoid paying hefty taxes on their inheritance.
Several estate planning tools are available to help handle Melville estate tax implications. The experienced lawyers at Tully Law Group, PC, could explain how these laws apply to your situation and create a strategy to address potential tax concerns. Get started on your plan – work with our team today.
