The process of New Jersey estate planning can involve some added complexities when there is a considerable amount of wealth involved. For high net worth individuals, estate planning is better described as legacy wealth planning.
Let’s take a look at this type of planning and examine some of the components of a legacy wealth plan.
Estate Tax Efficiency
Estate tax efficiency is going to be a primary concern for high net worth families. Accumulating wealth is difficult, but retaining this wealth over generations can be equally challenging.
One major source of asset erosion is the federal estate tax. The maximum rate of this death levy is 40 percent, and the amount of the credit or exclusion is $5.45 million.
Once you have transferred $5.45 million tax-free, the estate tax becomes applicable.
A legacy wealth plan will include the implementation of estate tax efficiency strategies. There are a number of different ways that you can mitigate your exposure. The ideal course of action will vary depending upon the circumstances.
When you discuss your situation with a New Jersey estate planning attorney, he or she will gain an understanding of your financial profile and make the appropriate recommendations.
Tax efficiency devices that are utilized would include generation-skipping trusts, qualified personal residence trusts, charitable lead trusts, charitable remainder trusts, grantor retained annuity trusts, qualified terminable interest property trusts, and family limited partnerships.
In addition to the federal estate tax, some states impose estate taxes on the state level. Here in the state of New Jersey, we do indeed have an estate tax. The exclusion is much lower than the federal exclusion, and in fact, it is the lowest state-level exclusion in the country. In New Jersey, the state-level exclusion is just $675,000.
Legacy wealth planning can involve the preservation of family heirlooms. Some of these may be very valuable financially, and some of them may only have moderate value on a monetary level. However, these heirlooms have value that goes beyond mere dollars and cents.
When you carefully pass along family heirlooms to those that you will be leaving behind, you are keeping memories alive.
These pieces were touched by those who came before you, they passed through your hands, and now you are handing them off to the next generation. This is an extraordinarily meaningful act that adds mortar to the substance of your family legacy.
Your legacy wealth planning efforts can involve charitable giving. When your name is attached to acts of generosity you will always be remembered in a positive light.
It can be personally meaningful to give to charitable causes and institutions that you believe in. At the same time, you can oftentimes gain tax benefits when you give to qualified charities.
If you would like to research charities to see how wisely they utilize their resources, there are websites out there that can help. One of them is CharityNavigator.org.
This site provides in-depth ratings so that you can be aware of the way that charitable organizations are being run. You can subsequently use this information when you are making decisions with regard to acts of charitable giving.
There is a type of will that you may not have heard of called an ethical will. This type of will has nothing to do with the transfer of property, and it has nothing to do with health care choices. It is not legally binding in any way. Yet, it can be one of the most valuable documents that you leave behind.
Ethical wills have been used since biblical times, stemming from the Judaic tradition. With an ethical will you leave behind your moral and spiritual values. Your loved ones can draw from this wisdom after you are gone.
When you leave behind financial resources you are providing support. However, there is a different type of support that cannot be bought. When you are no longer around to provide guidance on a personal level, your ethical will could serve as the next best thing when family members are looking for answers.
Take the Next Step
We have provided some food for thought in this blog post, and it may have inspired you to take the next step toward the creation of a legacy wealth plan. Our firm is going to be holding a number of informative seminars over the coming weeks, and you can learn a great deal about legacy wealth planning if you attend the session that fits into your schedule.
To obtain all of the details and registration information, visit our seminar schedule page.
Latest posts by Alan Augulis, Estate Planning Attorney (see all)
- Trust Administration 101 for the First-Time Trustee - August 23, 2018
- Do I Need a Medicaid Planning Attorney? - June 11, 2018
- Can an Incapacity Planning Attorney Help Me Plan for the Possibility of Alzheimer’s? - May 1, 2018