A lot of people think that estate planning is something that is only important for very wealthy people. They think that you do not need to work with an attorney to map out a comprehensive strategy unless you are a multimillionaire. In reality, this is patently false, and we will look at the subject in this post.
Estate Taxes
Part of this misconception comes from the little bits and pieces of information that folks hear about estates and taxation. Generally speaking, an inheritance is not subject to regular income taxes. Plus, inherited appreciated assets get a stepped-up basis for capital gains purposes. Inheritors are not responsible for gains that accumulated during the life of the decedent.
However, high net worth individuals do have to be concerned about taxation. There is a federal estate tax that carries a 40 percent top rate, and there is a state-level estate tax in Connecticut. The reason these taxes are only a factor for the wealthy is because there are exclusions.
An exclusion or credit is an amount that can be transferred tax-free before the remainder would be subject to taxation. The federal estate tax exclusion is $12.92 million for 2023 which is an increase from the $12.06 million in 2022. The Connecticut state estate tax exclusion is $12.92 million in 2023 which is up from $9.1 million in 2022.
Yes, most people do not have to pay these taxes, and estate planning attorneys do help certain clients develop tax efficiency strategies. However, this does not mean that estate planning is not useful for people to do not have to be concerned about these taxes.
Streamlined Estate Administration
Most people that think estate planning is only for the rich assume that that a will is the only estate planning documents they will need. They assume that a will is the simplest and quickest way to get assets into the hands of their loved ones.
In actuality, this is not the case. The executor that is named in a will is required to admit the document to contact form on this site you can use if you would rather send us a message.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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