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Avoiding Estate Planning Mistakes- Step 6

Don’t overlook states’ inheritance taxes.

Delvin thought he had New York State beat – his estate was 1.5 million so there are no estate taxes. His children would get his estate tax free.

Most clients’ estates will avoid federal estate taxation due to the $5.25 million exclusion but that doesn’t eliminate states’ inheritance taxes, Watkins cautions. “People, particularly immediate family members like sons and daughters or spouses, those types of beneficiaries can get hit pretty hard with inheritance taxes, not estate taxes. Those taxes are actually paid by the beneficiaries, not out of the estate.”

In New York State, the estate tax threshold is $1,000,000.  If your estate is over $1,000,000, then it will be subject to New York State Estate Taxes. For example, on an estate of $1,500,000, the tax is $64,400 and on an estate of $5,250,000, the tax is $420,000.  So, if you want to avoid taxes, you need to plan.  The good news is that New York State does not have a gift tax.

For more on the “Peace of Mind” program at Vincent J. Russo to avoid these problems, visit: www.vjrussolaw.com.

 

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