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Tax Limbo Makes New Jersey Estate Planning Trickier

Coming next year, not only will New Jersey still have to deal with their high state and local property, income and sales taxes, but a federal estate tax will make a comeback.

As you have probably heard by now, our country is in a much debated limbo regarding a federal estate tax. The tax that existed during George W. Bush's presidency expired in January, 2010, and many Americans have been able to keep more of their loved ones' money than they would have in previous years.

The country's estate tax is scheduled to return next year, and if President Obama gets his way, those who saved on estate taxes in 2010 will have to make up for those savings retroactively.

The uncertainty regarding an already complex aspect of life-planning leaves  Americans throughout the country, including tax lawyers, feeling even more confused and stressed about approaching the important process of estate planning.

But now, more than ever, it is important to be strategic when planning for the future of your finances and your family. Forbes.com recognizes Americans' need for advice and gives the following financially savvy estate planning tips:

  • When writing your estate plan, make sure you explicitly plan for a variety of situations. Write up the plan for a year that does have an estate tax as well as a year that does not. Be specific regarding what you will do with the extra money if no estate tax is taken out of your assets.
  • Your chosen executor should be someone you trust to make sensitive, complex and wise financial decisions. A friend or family member whom you have listed as an heir might not necessarily be the best choice. An heir can benefit and lose out depending on an executor's decisions; therefore, an heir making those choices presents a conflict of interest.
  • If you have money to spare, gift up to $13,000 ($26,000 per couple) of untaxed dollars per year to each child or grandchild. Payments towards someone's education or medical bills are also effective and helpful ways to share your earnings--untaxed--before you die.
  • Gift your spouse as much money as you want, and that gift goes untaxed. As morbid as it sounds, if they happen to die in a year with no estate tax, that leaves more money for you and their family when they pass.

Today, jobs and money are hard to come by and keep. Wielding your control over your hard-earned possessions and protecting your family's financial future through responsible estate planning is so important.

 

Resource

How to Protect Your Family from Estate Tax Uncertainty

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