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McHugh & Macri
Certified Elder Law Attorneys Serving New Jersey Residents since 1978.
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How income changes may affect estate planning

NAELA National Academy of Elder Law Attorneys, Inc. MEMBER

New Jersey residents may be aware that there were significant changes to the tax code in 2012. However, they may not be aware of how these changes can affect their estates. New laws may require a different type of plan for the future than what was previously anticipated.

Under the new laws, income tax rates are higher for many people. It is therefore important to incorporate income tax needs into an estate plan to see if there is a way to reduce income taxes. Many people previously used trusts to reduce estate tax. However, with higher income taxes, it is now possible that the benefits from a trust are reduced. People who created trusts prior to 2012 as part of an estate plan may benefit from reviewing the plans to determine if the current trust will still meet their objectives. It may also be important to review any change to state taxes and how they will impact an existing estate plan.

People who purchased life insurance to cover estate taxes may find less of a need for the policy. However, life insurance may now be more a more desirable investment than it was previously. Higher income taxes may give people more of an incentive to make charitable donations during life, rather than as part of a will. The higher exemptions on estate taxes also makes it less urgent for people to give away their assets during life.

Many people could benefit from periodically reviewing an estate plan to ensure that it still meets their needs as tax laws change. An estate law attorney may be able to assist by reviewing a person's assets and objectives to determine the right course of action and by helping to adjust estate plans as necessary.

Source: Investing Daily, "How estate planning is changing", Bob Carlson, June 07, 2013

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