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ESTATE TAX PLANNING AND CONSIDERATION

The current federal tax exemption is $13.61 million/$27.22 million per couple, which is portable. If there is no legislative action, the amounts will return in 2026 to $7 million/$14 million per couple.  Amounts above the exemptions are taxed at varying rates between 18% to 40%.

 

The current New York State tax exemption is $6.94 million but is not portable. In addition, there is a New York State Estate Tax Cliff which means the exemption benefit is lost if the exemption is exceeded and the entirety of the estate could be subject to a 5% to 16% estate tax rate.   

 

The current annual gift exemption is $18,000.00.

 

Revocable trusts are good vehicles for avoiding probate and associated costs and delays. Irrevocable trusts also avoid probate, but potentially provide creditor protection, asset protection, and estate tax benefits. Assets must be transferred to or retitled in the name of the trustees/trust for them to serve their purposes.

 

If you and/or your spouse have assets that are nearing, equaling or exceeding these thresholds, now is a good time to consult with your estate planning attorney, accountants, and financial advisors for methods and strategies to preserve wealth and potentially avoid or reduce taxation.  Given approaching legislative sunset provisions, this task becomes even more time sensitive and important.

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