Many of you are currently gathering your income tax information for filing your 2013 income tax return. You might want to take a little extra time to review your existing estate plan and estate plan documents (Will, Power of Attorney, Health Care Directive) to reflect current state and gift tax law, and changes in your family situation.
For 2014, the top federal estate tax rate is 40%. The federal exemption amount is up to $5,340,000 ($5,000,000 indexed for inflation) per individual. That amount is $10,680,000 for a married couple, if each owns at least $5,340,000 in their own name, or if they can take advantage of “portability”.
The New Jersey exemption amount remains at only $675,000. That means that for couples with assets of over $1,350,000 there can be New Jersey estate tax due on the death of the surviving spouse, even if their assets are well below the federal estate tax threshold.
The New York exemption amount is currently $1,000,000, although Governor Cuomo has proposed raising it to conform with the federal exemption amount. So under current law in New York, for couples with assets of over $2,000,000 there can be New York estate tax due on the death of the surviving spouse.
There is no “portability” for state estate tax purposes.
In addition to tax considerations, changes in your family situation, such as marriage or divorce, births or deaths, or a change of residence to another state, may call for updating your estate plan documents and your estate plan.
Consider also the use of gifting strategies, life insurance planning, and use of lifetime trusts for both tax and non-tax purposes.