Any time is a good one for local residents to conduct New York estate planning, because no one can say with certainty what tomorrow will bring. Having a plan in place provides the peace of mind of knowing that affairs will be handled no matter what the future holds. However, as reported this weekend in the New York Times, proposed federal tax changes should act as even more motivation to take advantage of planning options now which may not be available in the coming years.
National policymakers continue to disagree about budget deficit reduction strategies, with countless variations of tax increases and spending cuts proposed. No one can say with any confidence what may happen. However, experts continue to explain that it is always advisable to plan for what is known and not for what one speculates might happen. A variety of tax changes may go into effect next year or the following year, and so it may be advisable to take steps now to plan for their long-term financial affairs. A key part of that process for local residents involves visiting a New York estate planning lawyer to have a plan created or updated.
For example, observers note that it may be advantageous for those thinking of transferring ownership of a company or other property to adult children to do so in 2011 or 2012 while there is a $5 million exemption from gift taxes. At the current schedule by 2013 that exemption will drop to only $1 million and the tax rate itself is set to increase from 35% to 55%. As an experienced New York estate planning lawyer can explain, personal gifts may be an important part of reducing eventual estate taxes. Individuals can give up to $13,000 annually without tax to anyone, and couples can double that amount. One expert explained that a popular way that parents and grandparents can utilize the $13,000 annual exclusion is to set up a Roth I.R.A. for a student who has a side job. As long as the relative has some earned income, than an I.R.A. account may be opened for them.
In addition, costs paid directly to third parties for some services–such as tuition or medical care–may not count toward that tax-free limit, allowing even more money to be saved through gifting. This is often a good way for older relatives to provide aid to family members while saving on eventual estate taxes at the same time. In any event, many options remain for those considering the best way to prepare their long-term financial affairs. One need only visit the right professionals to get the ball rolling and take advantage of these favorable tax situations while they are still available.
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