You have spent your lifetime amassing wealth that supported you and your family in comfort. As you face your golden years and do your estate planning, it’s important to do all that you can to minimize probate costs, taxes and other fees for which your heirs and beneficiaries will be responsible before they get their inheritances.
But with careful planning and management guidance now, you can devise the perfect strategies to preserve your wealth.
Start early with upstream gifting
If you are in your younger, bigger-earning days, you could make a series of asset transfers to older parents or even grandparents, as these demographic groups might have less exposure to estate taxes. You would then be gifted the asset when the elderly relative dies, thus potentially lowering any capital gains for you.
What could go wrong
Should the relationship between the grantor and grantee relatives deteriorate, the asset could be lost. Should the one entrusted to manage the wealth fail to properly manage it, it could decrease. Market volatility must also be considered, which can be a factor in wealth diminishment, no matter who may be at the helm.
Strategy for reducing capital gains
One way to reduce capital gains on financial and other assets is to have the cost basis updated upon the death of its original owner. Then, should heirs decide to put the asset up for sale, their capital gains taxes could be a lot cheaper.
Gift during your lifetime
As of 2025, individuals can gift others up to $19,000 a year without having to pay any gift taxes. Many older persons make periodic distributions to their children and grandchildren on an as-needed basis. These tax-free gifts can be a huge help with tuition bills, wedding costs, down payments on homes and other important life events that can leave budgets straining.
Make the best financial decisions for you and your family when doing your New Jersey estate plan.
