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Estate planning news: Exclusion amount rising in 2016

On Behalf of | Dec 18, 2015 | Estate Planning |

Most people in New Jersey are aware that there are rules in place that govern how much estate tax can be charged on assets handed down after an individual’s death. Some know that the current amount lies at $5.43 million, and they will go to great lengths to create estate planning packages that minimize their taxable estates. Anything above that amount is subject to estate tax, which currently sits at 40 percent. The amount of the estate tax exclusion is adjusted for inflation, and it will increase to $5.45 million in 2016.

Estate planning is more than simply avoiding excessive taxation, however. The primary goal of any good estate plan is to hand down assets in a manner that meets the goals and intentions of the person shaping the plan. Those goals can and will change over the years, which makes it vitally important to engage in a periodic review of the existing plan.

Some things will remain the same in 2016. An example is the current estate tax rate, which will stay at 40 percent. In previous years, the estate tax was 50 percent. Another thing that will stay the same is the portability rule, which allows a spouse to take advantage of any unused portion of his or her deceased spouse’s exclusion amount.

A new year is a great time to look over one’s existing estate plan. If an individual has experienced any major additions to the family or experienced a recent loss, it may be time to alter his or her estate planning to reflect those changes. Some in New Jersey will be fortunate enough to be able to take advantage of the increased exemption amount. For many others, however, the news serves as a reminder to check in with their estate plans to make sure that they still serve the intended goals.

Source: fool.com, “Estate Planning in 2016: Here’s What You Need to Know“, Dan Caplinger, Dec. 11, 2015