Personal Estate Tax Planning

You’ve spent your whole life building your legacy and providing for your family, but have you spent any time planning for the protection of that legacy after you pass away? It may not be pleasant to think about your own passing, but if you want to protect your estate and your legacy, it’s something that can’t be ignored.

At Smolin Lupin, we help our clients develop and implement strategies to protect their assets and their legacies. We work with you to identify your goals for you and your family focusing on your assets, prioritizing risks and concerns, and working with you and your team of professionals in implementing solutions to reduce tax liabilities and pass on assets in accordance with your wishes.

Here are some of the ways in which we help our clients with personal estate tax planning:

 

Maximizing Family Wealth Through Tax Minimization

The government has raised the lifetime exemption amount on estate taxes in recent years to an excess of five million. However, it is still possible that you may face federal estate taxes if you have a substantial amount of assets. This is especially true if you’re leaving assets to someone other than your spouse.

Also, some states have their own estate taxes. New Jersey is one of those states, requiring taxes on estates that exceed $675,000 in taxable estate. So even if your estate isn’t large enough to face federal estate taxes, it’s still possible that you may face state estate taxes.

We help you minimize that tax liability and maximize the amount of money that ends up in your loved ones’ hands.

 

Development of Gift-Giving Programs

One way to reduce your estate’s tax liability is to start giving assets away while you’re alive. By giving assets away, you reduce the size of your estate. The gifting could either bring the estate under the exemption level or at least reduce the taxable portion of the estate.

Gifting has the added benefit of allowing you the opportunity to see your legacy at work while you’re still alive. You can see how your children and grandchildren benefit from your assets. You can see how your favorite charity uses your gifts to help others.

While gifting is an excellent tool, it also has its fair share of regulations and complexities. Tax rules govern how much you can give to each person. They also limit how much you can give in a lifetime and how much one person can receive without having to pay income taxes.

The goal here is to maximize the power of your legacy, so it’s critical that you have an experienced partner managing your gifting strategy. This is especially true if you’re giving assets to multiple people or entities. Without a skilled manager, the gifting program could quickly veer outside the rules and result in unwanted taxes.

 

Creation and Implementation of Business Succession Programs

Business ownership can be financially and personally fulfilling. Your business is probably directly responsible for your estate and legacy.

Many business owners wait too long to consider what will happen to their business after they retire or pass away. Unfortunately, that lack of planning can bring unwanted results. Your family may have to sell the business to pay an estate tax bill. Your family could be ill-equipped to run the business and it could slide into being unprofitable.

You can help yourself, your business and your family by planning ahead. Start by asking yourself the following questions:

  • What do you want to happen to your business?
  • Do you know who your ideal successor is or do you still need to identify him or her?
  • What is the financial mechanism that will allow the successor to take ownership of the business while still providing for you and your family for your hard work?

These questions aren’t easy to answer, but they can be easier when you have a trusted team on your side. We help our business owning clients work through these issues as part of our personal estate tax planning process. We then implement tools to help ensure the successful transition of the business across generations.

 

Business Valuation

If you own a business, one of the biggest parts of your personal estate tax planning process is determining how much your business is actually worth. That’s no easy task with a closely held business. You can’t just look at the company’s stock price. You have to dig into the business itself and make an informed estimate about its value.

Business valuation is part art, part science. Even though it’s difficult to come up with a precise value, the final number can have significant consequences. The valuation can affect your estate’s tax bill. It can affect your chosen successor’s ability to purchase the business from your family or in gifting to a family succession. It can impact nearly everything involved in the transfer of your estate to your family.

Valuation shouldn’t be done casually. It should be the result of a disciplined and proven process. That’s exactly what we do at Smolin. We get to know your business inside and out so we can provide the most accurate and transparent valuation possible. That helps you and your family better prepare yourselves for ownership transfer upon your passing or retirement.

 

Wealth Maximization Through Qualified Plan Distributions

If you’re like many people, much of your wealth is tied up in your qualified retirement plans. Plans like 401(k)’s, 403(b)’s and IRAs are powerful tools for accumulating wealth, primarily because of their ability to defer taxes. However, the taxes must be paid at some point and that point is often when the plan participant passes away.

If your qualified plans are left to your spouse, there may not be any tax liability. However, if your plans are left to someone other than a spouse, they may have to pay a sizable portion of the plan’s value in taxes. Of course that’s not what you want to see happen to your hard-earned savings.

There are strategies that you and your beneficiaries can use to maximize the value of your qualified plans and minimize the tax burden. Your beneficiaries have options in how they receive the benefits and each of those options has different advantages and disadvantages from a tax standpoint.

We help our clients and their families better understand their potential tax liability and implement strategies to minimize those payments. We review payment options with beneficiaries and help them understand how those different options can affect their overall payment. Your retirement plans are too important to not include in your personal estate tax planning.

 

Personal estate tax planning may not be enjoyable to think about, but it’s too important to ignore. It’s also too important to delegate to someone who doesn’t have the right amount of experience and expert knowledge. We pride ourselves on leveraging our expertise and proven track record to bring peace of mind to our clients and their families. Contact us today to discuss your personal estate tax planning and how we may be able to help.