Bayside, Bellerose & Hollis Estate Law
New York Residents to be Affected by 2019 Estate Tax Change
Building your legacy is much more simply accomplished if you have been fortunate enough to have acquired financial success. The flip side of this is with a great legacy comes the varying ways in which your assets decrease. Death taxes can be quite substantial and become a problematic burden to your family.
Sound confusing? Have no fear, our Bayside area probate estate firm is here to assist you with any questions you may have on 2019 estate tax rates.
It has been frequently argued that all forms of death taxes are unjust. The argument is as follows, throughout our lives we are consistently and constantly being taxed wherever we go:
Capital gains tax
FICA or self-employment tax
Federal and state income taxes
Taxes on gasoline and hotel rooms
The list can go on, and on. Your estate, consisting of all your assets, constitutes what remains after having paid all these varying forms of taxes over a lifetime. Why, after inevitably dying - which is undeniably unavoidable - should you be held accountable for paying taxes? While the argument is sound and generally perceived by many, it is essentially moot. In spite of how we may feel about death taxes, they are one of life's certainties. We all know that in the nearby neighborhood of Fresh Meadows their are a lot of retirees who really need to make sure that their family understands these taxes and what the implications they can have on their loved ones.
Federal Estate Tax
The federal estate tax can affect citizens across the US, carrying a maximum rate of 40 percent. There is a tough exclusion though, for people of high net-worth which is why is the estate tax can be an issue for them. The current exclusion amount - which can be adjusted throughout the year due to inflation - is $11.8 million. Consequently, there may be a moderately higher rate in the coming year. Estate planners in the Bellerose region of the county who are have already experienced an increase in cost of living must be aware of this.
New York Estate Tax
State level estate taxes are not issued by all states. In New York, however, there is an estate tax. Not only is there an estate tax in New York, but if you happen to have been exempt from the federal estate tax it does not roll over to the state level. The current state-level exclusion has been $5.25 million, but changes are on the horizon for 2019.
Gradual adjustments to the New York estate tax framework that were implemented a few years ago, will be coming to an end in 2019. The precise number of the estate tax exclusion for the coming year is going to be $5.74 million as issued by the New York State Department of Taxation and Finance. Depending on the size of the estate, New York has a graduated estate tax rate that begins at 3.06 percent and caps at 16 percent for those estates priced higher than $10.1 million. Hollis is known for it's large estates and they will definitely need to study these rates well or call us to learn more.
The Estate Tax Cliff
The initially transferred $11.8 million would not be vulnerable to federal estate taxation, regardless of whether the value of your estate is $8 billion or $10 million. It is significantly different, however, with regard to the estate tax in New York, due to a factor known as a “cliff.” There is decisively no exemption if your estate is valued higher than five percent above the exclusion amount. This means that your estate, in its totality, would be predisposed to taxation. For example, let’s say at the time of your death your estate is valued at precisely $5.74 million in 2019, you would not be taxed. Five percent of $5.74 million is $288, 000 bringing the estate total to a little over $6 million, in this scenario your whole estate would be taxed. It is undeniable and essentially absurd to defend the decency of the estate tax cliff in New York.
Making the Most Out of Your Estate Taxes
There are courses of actions, estate tax efficiency strategies that can be implemented and are available for you, whether you are subject to estate tax at the state level, federal level or both. Tools, such as certain irrevocable trusts and the family limited partnership. Depending on your situation our legal team is experienced and prepared to advise you of the best options available to you. Contact us today.
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