Money is important, and the inheritances that you leave to your loved ones can provide them with opportunities and an added sense of security. Without question, the proper facilitation of asset transfers is a large part of what legacy planning is all about.
We practice law in the state of New Jersey. You have to be very concerned about legacy preservation as a resident of the Garden State. This is because of the taxation that we have here in New Jersey.
Everyone around the country has to be concerned about the federal estate tax, but most people are not exposed. This is because there is a credit or exclusion that is relatively high. The exclusion is the amount that can be transferred tax-free. Only the portion of an estate that exceeds the amount of the exclusion would be subject to the federal estate tax.
During the 2016 calendar year, the federal estate tax exclusion stands at $5.45 million.
There are 14 states in the union that impose state-level estate taxes. New Jersey is one of them, and the exclusion on the state level is the lowest state-level estate tax exclusion in the country. The first $675,000 can be passed along tax-free, but the rest is potentially subject to the state-level estate tax and its 16 percent top rate.
In addition to the estate tax, in New Jersey, we also have a state level inheritance tax. This tax can be applied on transfers to each individual inheritor that is not exempt, so this is yet another level of taxation that can impact your legacy.
There are steps that you can take to mitigate your exposure to these taxes. This is something that you should discuss with your attorney when you are engaged in your legacy planning efforts.
More Than Money
They say that money doesn’t buy everything, and this is absolutely true. When you are crafting your legacy plan, you can address certain matters of the heart, mind, and soul, and these efforts can be quite rewarding to you and your family.
Some of the things that you can do require writing or audio recording. There is nothing more fascinating than a good biography, because you learn about the person, but you also learn about history of the era that this person lived in.
Learning about the life of someone else is interesting, but when you can access the memories of a beloved family member, the opportunity is priceless. When your legacy planning efforts are underway, you could take the time to write down or record your personal memoirs. As you are doing so, you can place an emphasis on the family history that you remember.
When family members can access this treasure trove of information, they can learn a great deal about their ancestors, and they can gain an understanding of the family tree.
Another legacy planning document that would require some writing is an ethical will. Unlike a last will, this type of will has nothing to do with monetary matters. You share your moral and spiritual values when you create an ethical will, and people have been doing this for centuries. An ethical will does not have to be heavy-handed; it is simply a sincere sharing of your “rules to live by.”
Charitable giving can also be part of your legacy plan. When you bolster causes and institutions that have been meaningfully to you throughout your life, you enter your twilight years with a sense of serenity. You could be in a position to establish a private charitable foundation, and a charitable trust of some kind can also be an option.
Education is another thing to consider. If you are in a position to do so, you could set aside resources for younger family members so that they can have access to educational opportunities. When your family members achieve their full potential as human beings with your guidance and assistance, you subtly have an influence on the world for many years after you are gone.
Learn More About Legacy Planning
Hopefully, we have opened your eyes a bit in this blog post. If you were to engage in some of these legacy planning activities, you would be doing your family a service, but you may also find the process to be personally cathartic.
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