If you’re worried about the tax man coming for your estate, know that only two percent of estates are subject to a federal estate tax. On a federal level, an estate tax is imposed only on wealthy clients, and if that’s you, know that making certain moves can allow you to maintain even more wealth while keeping you below the federal and
state estate tax limits.
Estates must be worth more than $22 million to be subject to a federal estate tax. That means the majority of people – 99.8 percent – do not pay any estate taxes. While there is currently no estate tax in place in New Jersey – a tax on assets that are worth more than $2 million was repealed in January of 2018 – it is possible that the state’s estate tax will be reinstated and made retroactive.
State lawmakers are currently considering reinstatement of the New Jersey estate tax (established in 1934 in a simple form), which is of concern. The state’s inheritance tax is also still in place, making it more difficult to escape taxes.
How can I Avoid an Estate Tax?
If there are assets you know you are going to bequeath to a spouse or child, putting them in an irrevocable trust – which makes the trust the owner of those assets – removes them from the estate. While an irrevocable trust can only be changed by a beneficiary, it can keep an estate’s assets below both federal and state estate tax limits.
Giving gifts to family members can also prevent an estate tax by diminishing assets while you’re alive. Anyone can give a gift of up to $15,000 a year without requiring the payment of any tax.
Which States Have an Estate Tax?
While it may be only a matter of time before there is a change, New Jersey, along with most other states, currently has no estate tax. A handful of states, however, do. Washington, Oregon, Minnesota, Illinois, Vermont, Maine, New York, Massachusetts, Rhode Island, Connecticut, Maryland, and Washington, D.C. have state estate taxes with varied exemption amounts.
If you are looking for an experienced attorney in estate taxes, call the law offices of Steven W. Tarta, Esquire at (201) 444-8448 or send an email to info@tartalaw.com. The Tarta Law office has more than 45 years of experience and specializes in Estate Tax Planning, Living Trusts and Elder Law. Tarta Law serves clients in Midland Park, Ridgewood, Glen Rock, Wycoff and Franklin Lakes.
Steven W. Tarta, Esq. brings more than 45 years of professional experience to his practice, with a sophisticated focus on Estate Tax Planning, Living Trusts and Elder Law.