Most New Jersey residents are aware that their accumulated wealth will not be subject to estate taxes unless a very high volume of assets has been reached. The exact figure beyond which an estate is subject to taxation currently sits at $5,340,000. For married couples, that number can be extended to $10,680,000 with the proper level of planning. However, even individuals and families with a far lower net worth should consider creating an estate planning package that serves to protect their wealth from other forms of loss.
For example, state law can also affect how one’s assets are taxed upon death or at the time of an inheritance. Proper estate planning efforts can help ensure that the highest possible volume of wealth is passed on to the intended heirs. There are a great many tools and tactics that can be put to use to make the transfer of wealth simple and free of undue financial loss.
Another matter to consider is the creation of a concrete plan that lays out how and to whom assets are to pass. Many people, for example, believe that the directives given within a will can override any other designation of inheritance. This is not accurate, however, especially when it comes to accounts that have designated beneficiaries. Savings accounts, retirement vehicles, such as a 401(k) or IRA, and life insurance are all examples of assets that will pass to the designated beneficiary, no matter what is stated within one’s will.
By understanding the complex ways that assets are treated after an individual’s death, it is possible to structure an estate planning solution that ensures that wealth is passed down as intended. Avoiding estate tax is just one aspect of this process, and one that most New Jersey families do not have to address. A more pressing need in the majority of cases is to create a workable plan that passes assets down to the intended heirs, while avoiding undue losses to taxes, probate and other issues.
Source: citizensvoice.com, “IN THIS CORNER: Estate planning strategies not for just wealthy“, Christopher D. Ross, Dec. 14, 2014