Posted by: BlogMaster | August 15, 2014

Married Couples and Doubling the Estate Tax Exemption

In my prior blog I talked about the increase by NY State that allows an individual to pass more wealth to their survivors.

This so-called Exclusion amount will increase from $1 million to more than $2 million between April 1, 2014 and January 3, 2019, and ongoing until it reaches more than $5 million.

With proper planning, a married couple in NY State can pass along twice the Exclusion amount.

Is there a trick?

No. It just requires creating a Disclaimer Credit Shelter Trust in your Will or Living Trust.

Here’s how it works.

Each spouse leaves all of their own assets to each other. On the first spouse’s death, the survivor has up to 9 months (when an inheritance tax return is due) to ‘disclaim’ assets into a trust for their benefit under their own Will or Living Trust.

Using simple current figures, the surviving spouse typically owns $2 million of their own and disclaims the $2 million inherited from their deceased spouse. When the surviving spouse dies, the assets in the ‘disclaimed’ trust plus the $2 million all pass inheritance tax free to their heirs.

This chart shows the Exclusion amounts allowed by law – adjusted annually for inflation:

From 4/1/14 to 3/31/15              
NYS individual owner =  $2,062,500 Exclusion from Taxation              
NYS Married couple =    $4,125,000 Exclusion from Taxation with Planning
From 4/1/14 to 3/31/15              
NYS individual owner =  $3,125,500 Exclusion from Taxation              
NYS Married couple =    $6,251,000 Exclusion from Taxation with Planning
From 4/1/16 to 3/31/17                
NYS individual owner =  $4,187,500   Exclusion from Taxation              
NYS Married couple =    $8,375,000 Exclusion from Taxation with Planning
From 4/1/17 to 12/31/18
NYS individual owner =   $5,250,000   Exclusion from Taxation              
NYS Married couple =    $10,500 Exclusion from Taxation with Planning and ongoing in 2019

Basic estate planning for married couples doesn’t have to be expensive or complicated. Getting the right legal counsel and advice are key to doing it right.

Take time to look at your estate plan and assets. Estate taxes are alive and well and not going away in the foreseeable future.

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