E. Martin Davidoff & Associates

 


ESTATE PLANNING & TAXES

When Benjamin Franklin said, “In this world nothing is certain but death and taxes,” he should have added, “and the two are united in a process called estate planning.”

While the loss of a loved one creates a tremendous amount of stress and anxiety, dealing with the financial implications should not worsen the situation.  Estate planning is a valuable tool to ensure that an individual’s final wishes are honored regarding asset distribution, power of attorney, health care and even funeral arrangements.  Overall, the creation of a thorough estate plan will simplify the legal proceedings after death.

We can guide you through the process to properly address all the tax and financial matters, including:

  • Preparing a Will
  • Probating a Will
  • Estate Taxes
  • Inheritance Taxes
  • Gift Tax Returns
  • Distribution and Liquidation of Assets
A will, the most basic step in estate planning, is required whether an estate is worth $10,000 or $10,000,000.  Generally the estate planning process involves creating a valid will, a living will, and an inventory of assets including investments, jewelry, art, real estate, vehicles, etc.  These documents pointedly address issues such as guardianship of children, distribution of all assets, how liabilities will be paid, and any financial matters related to a business.
The probate process involves proving that the will is valid, and creating a summary of the decedent’s assets and liabilities.  Probating is also the stage where the executor of the will is responsible for paying taxes and distributing property to heirs.  When a decedent leaves a will directing how his or her property should be distributed after death, we submit the will to the Probate Court to determine its validity and initiate the process of asset distribution according to the decedent’s wishes.  If there is no will, we assist the court in appointing a personal representative to distribute the decedent's property.
Under current IRS rules, an estate tax must be paid on estates exceeding $1,000,000 in value.  It is important to accurately value an estate to determine if any taxes, or how much in taxes, are due.  One of the greatest challenges in filing estate taxes is the completion of U.S. Form 706, a 40-page document required by the IRS within nine months after the date of death.  Our professional team can handle this abundance of paperwork on your behalf.
In several states, an inheritance tax might be payable in addition to federal estate taxes.  In New Jersey for example, any inheritance passed to a spouse, child, grandchild or parent is exempt from the inheritance tax, however, an inheritance passed to siblings is exempt for only the first $25,000 and then taxed at a rate of eleven percent.  An inheritance valued over $100 passed to other relatives or non-related individuals is taxed at a minimum of fifteen percent.  Our staff is keenly aware of the laws surrounding estate and inheritance taxes and will ensure compliance in all areas.
A gift tax may be levied when an individual transfers property, money or other assets to another individual and receives little or nothing in return.  If large amounts of assets are gifted through an estate plan, a Gift Tax Return may be required.  We can evaluate the situation and determine whether this requirement applies.
In situations where an executor is unfamiliar with the responsibilities of his or her role, our highly trained staff will provide guidance and direction to ensure that all assets are distributed according to the decedent’s wishes and all liabilities are properly paid.