Are my assets taxable when I die?
Let’s start with the good news. The vast majority of us are not subject to federal estate taxes because the current (2021) threshold is $11.7 million for individuals and $23.4 for couples filing jointly. However, assets in excess of these amounts could be subject to federal estate tax.
The states of New York and Connecticut also levy their own estate taxes. The basic exclusion amount for New York in 2021 is $5.93 million. If a New York resident’s federal gross estate, plus the amount of any includible gifts, exceeds this amount at the date of death, a New York estate tax return must be filed. The New York estate tax rate starts at 5% and increases to a maximum of 16%. In Connecticut, the basic exclusion amount in 2021 is $7.1 million. The rate starts at 10.8% and increases to 12% depending on the size of the estate.
With proper planning, it is possible minimize or even eliminate both state and federal estate taxes.
Are life insurance proceeds taxable?
While life insurance proceeds may be free from income taxation, they are includible in the gross taxable estate of the policy owner. Thus, while you may think that you have a modest estate, owning an insurance policy with a large face value, coupled with any other assets you own, could make your estate taxable without proper planning.
Can I avoid probate?
Probate avoidance is a growing concern for many clients. Perhaps you want to keep your assets private from the public files of a probate court, reduce the ability of a loved one to contest your wishes, and/or reduce the legal costs associated with probating a will? These objectives can be accomplished utilizing a living trust funded with your assets. Such a vehicle will assist with the efficient management of your assets in the event of your incapacity and avoid probate when you die.
I'm not a millionaire so I don't need an estate plan, do I?
Failure to plan can lead to increased expenses to correct problems that a well-designed plan could easily avoid. For example, which would you choose – the nomination of a guardian for your child in a last will and testament or a long, expensive Court proceeding to have a guardian appointed for your child? This is only one example of how a well-executed estate plan will allow you to preserve your hard-earned assets for the benefit of your loved ones.
I only need a last will and testament, right?
No. While a last will and testament may determine how your assets are distributed at your death, it offers no assistance to you during your lifetime. In particular, a power of attorney and a health care proxy are essential to ensure that someone will have the ability to make health care decisions for you, pay your bills, and manage your finances if you lack mental capacity to do so during your lifetime. If you do not have this documentation, your loved ones will be forced to commence an expensive and possibly contentious guardianship or conservatorship proceeding to be empowered to manage your financial and health care affairs.
My first child was just born, should I begin to plan now?
YES! A life-changing event like the birth of your first child is an excellent opportunity to assess your priorities and plan for the future. Call us for an appointment at your earliest convenience and we will work with you to create a comprehensive, customized plan that fits your family’s needs.
What information should I bring to my appointment?
When you set up an appointment with our staff, we will email you our detailed data sheet for you to complete. This data sheet will provide us with important information that we need to assist you. Please fill out our detailed data sheet and send it in prior to your appointment so that our attorneys can be prepared to meet with you. On the day of your appointment, please bring your most current available bank and/or brokerage account statements, property deeds, long-term care insurance policy, and any existing last will and testament, trust, power of attorney, health care proxy, or living will.