There is a popular saying that "Nothing is certain but death and taxes." There have been many variations of this quote, one of which is attributed to Benjamin Franklin, but the phrase has been used for centuries and still seems relevant today; especially when discussing estate taxes.
Readers may be aware of what estate taxes are, but for those who are not, they are the taxes that must be paid when property moves from a deceased person to someone else. When people are developing their estate plans, this is often one major point of discussion, as people do not want to leave loved ones responsible for an enormous tax burden.
There are federal estate taxes that are levied on property transfers that are worth at least $5 million and there may also be state estate taxes that need to be paid. Many states do not have a separate estate tax, but New Jersey is one of the few that do. If a person dies in New Jersey, there is a 16 percent tax rate that is required for property transfers over $675,000.
So what does all this mean for our readers? This means that unless steps are taken to minimize these tax burdens, people could have to pay both state and federal taxes on the property you may be leaving to spouses, children or other loved ones. This can be an enormous responsibility and burden. Rather than put heirs in this difficult situation, people can meet with an estate planning attorney to discuss ways they may be able to avoid or reduce estate taxes. Being proactive and addressing these potential issues in a comprehensive estate plan can be an effective way of protecting yourself, your assets and your loved ones.
Source: WYPR, "How Federal Estate Tax Changes Influence Local Policy," Jason Van Slyke, March 12, 2014