One of the first consequences of the new estate tax law for 2011, the one raising the federal exemption amount to $5 million for an individual, was that financial advisors and planners were saying that “estate tax planning was OVER.” There was going to be no need to think about estate taxes ever again because of the high exemption amount. While I have maintained that tax planning is only one of the reasons to do estate planning, blanket statements like “estate tax planning is over” need to be examined a little more closely.
Here is a recent article from Forbes focused on estate taxes. The thrust of the article is that people are not taking into consideration the effect of state estate taxes, specifically the lack of credit given by the federal government. While the state estate taxes can be used as a deduction, that’s not the same as a credit. When you add it all up, the effective combined federal and state estate tax for New Jersey is over 54%. That is eye-opening.
Posted by Victor J. Medina, Managing Attorney
Medina Law Group, LLC
New Jersey Estate Planning Center