Chances are you do not want a large portion of your hard-earned assets and property to go to the government after you pass away. For this reason, a major part of estate planning often involves protecting against estate taxes whenever possible. In addition, there is more than one set of estate taxes that you must worry about, as both the federal and the New Jersey state government can tax eligible estates. In order to best protect both your assets and your beneficiaries, you should always ensure you seek assistance from an estate planning attorney with knowledge of both federal and state estate tax laws.
Federal Estate Tax
The Internal Revenue Service (IRS) has the ability to tax an estate up to 40 percent of its value. As you can imagine, such a hefty tax can seriously deplete the amount that your loved ones receive after your death. However, the IRS also sets out generous exemptions from estate taxes and, as a result, many estates do not have a tax applied at all. As of 2016, the exemption limit is $5.45 million dollars, which increased from $5.43 million in 2015. This exemption doubles for a married couple, which means a couple can leave up to $10.9 million to beneficiaries or give it away during their lives without being subject to any federal taxes.
New Jersey Estate Tax
The state of NJ is not so generous when it comes to exemptions from estate taxes. As of 2016, the limit is $675,000, which refers to the gross value of the estate. An estate can include many valuable assets including:
- Real estate owned
- Personal belongings and property
- Bank accounts
- Retirement savings
- Business interests
It does not take much for an estate to exceed $675,000, especially if you own a home and cars, have been saving for retirement, and have been investing your money wisely. However, there are certain expenses that can be deducted from the estate before tax exemption is determined, which include income taxes, the costs of a probate attorney, funeral costs, and more.
Call 201-498-9768 today for more information.
Estate taxes should always be a concern for individuals engaging in estate planning in New Jersey. At the Law Office of John L. Schettino, we will evaluate your situation and help you devise a thorough estate plan to protect your assets and your family. Please call today to discuss how we can help you.