New Jersey residents who want to set up trusts for their descendants face a myriad of new laws and regulations that may affect how they plan for trust dispositions. Estate planning is not becoming a simpler process; rather, with the changes brought about by the so-called "fiscal cliff" deal as well as the new Medicare tax on passive income, it is becoming more complex.
Estate planning experts have been watching the developments over budget and taxation policy in view of the recent "fiscal cliff" issue. The American Taxpayer Relief Act of 2012 has provided some clarity on estate planning issues, but those concerned with wills, trusts and other estate factors will need to be aware of changes that may affect the way estates are structured. Estate planning was in limbo for some experts while Congress was working out the estate tax exemption, portability and other issues related to inheritance. Current law now makes the $5 million estate tax exclusion permanent and allows surviving spouses to use any portion of a partner's unused estate tax exemption as well.
Reducing estate tax liability is an integral aspect of estate planning, and an especially important task for clients with large estates. But tax planning isn't exclusively for those with estates exceeding the estate tax exemption amount. Those with smaller estates shouldn't assume they will not be affected by estate taxes, since tax law tends not to stay put for very long.