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Changes to the estate tax will affect New Jersey's wealthy

For New Jersey residents who have significant assets, the United States government's plans regarding the estate tax will never be far from their minds. When crafting an estate plan, this is one of the most important issues they must confront. The amount that is shielded from the federal estate tax is constantly up for debate, and it is imperative to keep track of certain changes and proposals to ensure that the estate plan addresses this.

The latest information indicates that heirs can be protected from the estate tax in 2018 if a couple receives $11 million or if an individual receives $5.6 million. Regarding the annual gift tax exclusion, this will rise for the first time in five years to $15,000 in 2018. People who are formulating their estate plan will inevitably try to keep their estates and gifts below these thresholds to protect heirs from paying the 40 percent federal estate tax. A strategy for this is to transfer the wealth while they are alive and by donating to charity.

Currently, the exclusion is $5.49 million for individuals and slightly less than $11 million for couples. As this total is adjusted for inflation, it rises incrementally. The gift tax exclusion has been $14,000 from 2013 to 2017. Lifetime gifts that surpass that amount will be calculated against the exemption amount in the estate tax. Wealthy people are paying close attention to the attempts on the part of the Trump Administration to repeal the estate tax. The tax plan will be released before the end of 2017.

Having legal assistance to sift through all the different factors that come to the forefront with estate planning is key to having a well-crafted document. Protection from the estate tax is just one issue that must be considered. With wills, trusts and other integral portions and considerations in an estate plan, it is important to speak to an attorney who helps clients organize their estates.

Source: Forbes, "Estate Tax Exemption Projected To Top $11 Million Per Couple In 2018," Ashlea Ebeling, Sept. 15, 2017

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