Many New Jersey residents create a detailed estate plan as a way of providing for the next generations in their family. With a well-written will, financial trusts and lifetime gift planning, people can help to ensure that their family members do not lose a large chunk of their inheritance to estate taxes.
Although providing for beneficiaries is often what motivates people to plan their estate, it’s important for an estate plan to address the owner’s needs first. For example, people should be careful that they do not give away too much of their estate with lifetime gifts. No one in a family will benefit if an elderly person gives away too much and is left with insufficient funds for his or her own care.
Long-term inflation is a factor that should be taken into account during estate planning. Assuming that the annual inflation rate is 2 percent each year, a $20 million estate could have the purchasing power of just $9 million in 20 years. At the same time, the federal estate tax exclusion amount is expected to grow to $8 million over the next two decades. When people are planning ways to chip away at their taxable estate during their lifetime, they should understand that the value of their taxable estate is subject to change.
An estate planning attorney can often be of assistance in helping clients to balance their personal needs and their desire to provide for future generations with a comprehensive estate plan. If people would like to incorporate charitable giving into their estate plan, legal counsel might suggest the use of a charitable trusts.
