You may want to ensure that you set up your loved ones with financial protection when you are no longer around to take care of them. But when disclosing these designations and distributions in your estate plan, you must keep in mind that your assets may be required to undergo federal and state taxes. In other words, your loved ones may not receive the full amount of financial support that you initially planned for. Read on to discover what you should know about New York State estate taxes and how a seasoned Putnam County estate planning attorney from The Law Office of Andres D. Gil, PLLC can work to minimize your tax obligations.
What should I understand about New York State estate taxes?
First of all, you may not have to worry about your assets incurring federal estate taxes, so long as their total value is less than $12.92 million. But you may not be exempt from New York State estate taxes if your assets are valued at $6.58 million or more. With this, you may be taxed up to 16 percent of your estate.
So, within your estate plan, you must designate an executor to file and pay these estate taxes. You must select an individual whom you trust to take on this great responsibility. This is because any failure to file or pay on time may result in penalties plus interest.
Importantly, your executor must handle this within nine months of your passing. They may request an extension of up to six months; or if they claim an undue hardship, they may request an extension for up to four years. But this should only be asked if absolutely necessary, as interest may accrue on payments that have been granted an extension.
What should I do to reduce these taxes?
You may want to ensure that your hard-earned assets go toward someone of someplace meaningful after your departure. Rest assured, there are strategies that may allow you to reduce the total value of your estate and therefore reduce the taxes placed on your estate. Examples are as follows:
- Sell your assets to your loved ones, in exchange for their promise to pay annual amounts, via private annuity.
- Set up a family limited partnership and makes your loved ones general partners or second-class owners.
- Set up lifetime gifts to give to your minor loved ones.
- Distribute your assets through an irrevocable life insurance trust.
- Transfer your assets to your surviving spouse via an AB trust or a QTIP trust.
If estate planning is something you wish to kickstart today, then you must retain the services of a competent Putnam County estate planning attorney from The Law Office of Andres D. Gil, PLLC. We await sitting down with you at your initial consultation.