Income, Estate & Gift Tax Analysis

An effective estate plan seeks to minimize estate, gift and income taxes in the context of your overall planning objectives. Complicating your ability to minimize tax exposure are constant revisions to tax laws and uncertainty about changes in tax rates, exemption amounts and whether planning opportunities we currently use will continue to be available.

The estate, gift and income tax rules are complex, and estate planning can be challenging under any circumstances given the multitude of factors to be considered. Our attorneys can assist you with understanding the complexities of the federal and state estate, gift and generation-skipping transfer (“GST”) taxes and help you create an estate plan that is right for you.

Federal Estate Tax
The federal estate tax regime underwent dramatic change in 2010, with an increase in the estate tax exemption, a decrease in the estate tax rate, and the introduction of a “portability” concept for spouses. With a few exceptions, the 2010 tax bill changes were made permanent by the tax legislation signed by the President on January 2, 2013.  The federal estate tax exemption is $5,000,000, indexed for inflation since 2010.  The exemption for 2015 as increased for inflation, is $5,430,000 ($10,860,000 for spouses).  The tax rate is 40%, which higher than the 35% rate of recent years, but lower than the scheduled 55% rate that would have applied.  A welcome new concept in the estate tax rules is “portability”, which provides the surviving spouse with the ability to use any unused exemption of his or her spouse. Consider the following:

New York Estate Tax
New York also imposes its own estate tax, using the federal gross estate as its starting point. An important distinction between the federal and New York estate tax is that New York does not conform to any post-2001 federal estate tax law changes. Consider the following:

Gift Tax
Gifting assets to children, grandchildren or others reduces an individual’s gross estate, thereby saving estate taxes. To prevent someone from avoiding estate taxes completely by giving away all of his or her assets during his or her lifetime, the federal government imposes a gift tax at a current rate of 40% on any gifts not qualifying for the annual, lifetime, charitable or marital gifting exclusions. Consider the following:

Generation-Skipping Transfer (GST) Tax
In addition to estate and gift taxes, there is a GST tax on certain transfers that skip a generation, either by outright transfer or through a trust. Consider the following:

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