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Estate Planning vs Estate Tax Planning

Preparing for the future isn't just for the wealthy

One of the common misconceptions people have about estate planning is that ‘it’s only for the rich.’ People with a shrug of their shoulder will exclaim “what’s the point? I’m not rich, I can’t afford an attorney that can work my money and find all those tax loopholes. My money is just going to end up with the government anyway.”

Unfortunately, this attitude tends to lead many to disregard planning their estate, writing a will, and creating a plan. What these folks fail to realize is both the importance of planning, but also that for many, a slick lawyer with knowledge of every tax loophole is unnecessary. Estate Taxes in New York won’t affect many middle and working class families. A NY resident doesn’t have to file an Estate tax return if their federal gross estate is under $2 million and this number is actually going up. For a NY state resident who passes away on or after April 1, 2017, and on or before December 31, 2018, that estate won’t have to file a NYS estate tax return if that estate is worth less than $5,250,000.

So for many NYS residents estate taxes will never come into play. Even if you are a hard working middle class resident, with a home, nice savings and other assets, chances are that your estate won’t hit that estate threshold. Fancy lawyers and legal juggling of assets to avoid taxes should be off the table, but what should be firmly on the table is your estate plan. If a person passes without such a plan, they will be leaving their estate to be divided up or distributed by the courts. Pre-established laws dictate which relatives will receive money from the deceased’s estate. Planning for the future, including drafting a will (and maybe trusts) allows a person to ensure that their wishes may be adhered too. Maybe you have a best friend, favorite cousin or other people in your life that you want to take care of or to leave them an item that holds special sentimental value to the both of you. Creating a will is the way to make this happen, and luckily, technology has now helped make this process much more reasonable and convenient.
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