After the passing Ed Koch earlier this week, the city mourned one of New York’s greatest mayors. With a funeral that was choreographed and designed by the former mayor himself, New Yorkers and friends remembered his larger-than-life personality and celebrated his legacy. In fact, it has been reported by his former chief of staff that Ed Koch began talking about his death years ago and had made all of the appropriate arrangements and details much earlier in his life rather than wait until his final days. So in honor of a man who inspired a city and in his spirit of preparedness, here’s a few facts that we should all consider at some point in our lives and in light of recent estate legislation:
Wills and Living Wills
Everyone should have a will that is properly structured so that your assets pass in a tax-efficient manner to avoid unnecessary State estate taxes. In addition, healthcare proxies and directives should be clearly stated to ensure that your exact wishes are properly executed.
Congress has made permanent the $5 million exemption from federal estate tax. Both the estate and gift tax exemptions continue to be unified at $5 million and are indexed for inflation, so the exemptions are actually $5.12 million for 2013 per individual or $10.24 million for a married couple.
In addition to the indexed $5.12 million lifetime exemption, you can also gift $14,000 (a married couple can gift up to $28,000) each year to individuals and such annual gifts will not reduce the $5.12 million lifetime exemption. You may wish to consider forming gift trusts in order to protect the assets from unforeseen family disruptions such as divorce.
Even if you don’t consider yourself a high-net worth individual with assets that reach these levels, there are still important actions you can take to reduce your State estate tax exposure, protect your assets and secure the future of your loved ones. For more information on estate planning, please contact Felix Nihamin & Associates, P.C. at 212-502-4868.