Sizing-up the Estate
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Despite the title, this process is not meant to “value” the estate, but rather to help understand how the family elders are prepared for the next steps in aging.
It may help to start thinking about the size and complexity of the estate in order to prepare for the eventualities. Estates run from small easy affairs, through more complex sizable estates, to ones that are large and complex but have no planning regarding wills and tax status. While this may be fine when the patriarch or matriarch are alive but things can quickly become unmanageable for the heirs.
Estate size
All states have guidelines for settling “Small Estates”. Small estates with minimal assets or expenses can be settled quickly and easily. The break points in New York and New Jersey is $30,000, Connecticut is $20,000. That is after taking into effect exemptions for family support.
Larger estates have both internal dynamics and external (federal and State tax authorities) requirements that need closer attention and administration.
Organization
Determining if the estate has a will or trust is key when determining the work load. The existence of either of these documents makes the Administrator/executor’s job much easier as they (usually) clarify the distribution of assets. This minimizes the work and expense of going through probate administration. A will or trust still needs to be probated but there is depending upon the wording used, there is usually little discussion around distribution. As a reminder neither Prince or Tony Hsieh (Zappos Ceo) had a will or any formal estate plans when they died.
Taxes
The idea of “Sizing-up the Estate” includes determining where the estate falls within Federal, State tax and administrative guidelines, whether a will or trust exists and whether the estate is managed by individual(s) or professionals.
Some general guidelines:
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Upon the first death of a married couple (Spouse 1) when you die and leave your estate to a surviving spouse, there is no estate tax due regardless of the size of your estate because of the unlimited marital deduction.
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The current Federal Unified Federal Estate Tax exemption for 2021 is $11,700,000. If the estate (gross) is valued at less that the current tax exemption amount, there should be no tax payable. For estates valued above the current threshold, there are marginal tax brackets ranging from 18-40%. However, an estate will still need to file a federal tax return if it receives income over $600 within the past year.
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The Federal Unified Federal Gift and Estate Tax exemption for 2023 is $17,000.​
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States do have lower limits for estate tax exemptions with New York’s current limit being $6,850,000, Connecticut is $9,100,000. There is no requirement for New Jersey residents as of 2018. Above these amounts NY has marginal tax brackets ranging from 3.06% to 16%, while Connecticut’s marginal rates range from 10-12%.
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​There is no "gift tax" in NYS but any gift made within the three years of death will be added back to the estate for valuation purposes.
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The Connecticut Gift tax limits matches that of the Federal limits.
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Wzee is not providing tax advice nor should you plan your estate solely around our writings. You should hire a qualified tax advisor to help you through this portion of estate planning. ET is only highlighting that advance knowledge can help you understand how the estate “sizes up” tax-wise.
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Wzee uses precise algorithms to determine state-specific guidelines for all aspects of the executor’s workflow ranging from allowable fees to current tax guidelines. Subscribing to Wzee will minimize the time spent in having to sort through and double check state guidelines. Please take a look at our competitive fee tables.
Family Dynamics
Understanding family dynamics is important in determining the workload and associated stress levels. Every family is different in both temperament and geographical dispersion. Generally speaking, the clearer the ground rules are and better the lines of communication are the easier it should be to help the elder members of the family when they need it most.
Wzee helps in this regard by laying out guidelines for helping elder members, maintaining their current living standards and introduces safe, encrypted lines of communication via a chat line per family. One of the reasons for launching Wzee is to help families reconnect and work together in helping the elder members and minimizing discord within the family.
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