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Figeroux & Associates | 26 Court Street, Suite 701, Brooklyn, NY 11242 | www.askthelawyer.us | 855-768-8845
Estate planning is not just about distributing assets — it’s also about protecting those assets from unnecessary tax burdens. At Figeroux & Associates, we’ve seen too many clients in New York suffer avoidable financial losses because they didn’t account for tax consequences in their wills and trusts. The result? Heirs left with surprise tax bills, depleted inheritances, and estate plans that fall short of their intended goals.
Taxes Don’t Disappear After Death
New York residents must contend with a complex web of tax rules when it comes to estate planning. The most commonly overlooked tax issues include:
- Estate taxes
- Gift taxes
- Income taxes on trusts
- Capital gains taxes
If not addressed during planning, these taxes can reduce the value of your estate and make distribution more expensive and time-consuming.
New York State Estate Tax Trap
While many assume estate taxes only apply to the ultra-wealthy, New York’s estate tax threshold is lower than the federal level. As of recent figures, estates valued over $6.94 million are subject to state estate taxes. But here’s the catch: New York has a “cliff” tax rule — if your estate exceeds the exemption by just 5%, you lose the exemption entirely, and the entire estate becomes taxable.
This can cost heirs hundreds of thousands of dollars if not planned for properly. A trust structured without understanding this rule may actually do more harm than good.
Capital Gains and Basis Missteps
Another critical tax issue is the step-up in basis. Assets passed through a will typically get a step-up in value to the date-of-death market price, minimizing capital gains taxes if sold later. But assets in certain irrevocable trusts may not receive this benefit. If not structured with tax consequences in mind, trusts can unintentionally trigger capital gains tax liability for heirs.
Income Taxes on Trusts
Many people are shocked to learn that trusts pay some of the highest income tax rates. As of recent federal law, trusts hit the top income tax bracket at just over $14,000 of income. If a trust is poorly managed or not designed to distribute income properly, it can accumulate income and be taxed at the highest rate, further draining the estate’s value.
Missed Opportunities for Tax Savings
There are legal strategies available to minimize taxes — such as credit shelter trusts, charitable remainder trusts, and lifetime gifting plans. But these must be carefully planned and customized. Generic wills or online trust templates rarely take these opportunities into account.
Protect Your Estate — And Your Heirs
At Figeroux & Associates, we work closely with clients to ensure their estate plans account for every tax angle. We analyze your assets, review current tax laws, and create wills and trusts that protect your wealth and reduce unnecessary tax exposure.
Don’t let your legacy shrink because of a tax oversight. Call 855-768-8845 or visit www.askthelawyer.us today to schedule a consultation. A strong estate plan protects not just what you leave behind — but what your loved ones actually receive.
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