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New Year Estate Planning Taxes, Gifting and Retirement Planning

New Year Estate Planning: Taxes, Gifting and Retirement Planning

Estate Planning, Wills

Hopefully, you’ve resolved to create or update your estate plan in the new year. But before you start drafting or editing your Will or other estate planning documents, be sure to know about recent changes in the law, as well as some long-standing requirements, that are sure to impact your decisions. Failure to do so can have costly repercussions for you or your family!

Assembly Bill 10: If you’re lucky enough to be a New Jersey millionaire, the State has increased your income tax rate. Signed into law this fall, the so-called Millionaires Tax raises the income tax rate from 8.97% to 10.75% for people who earn between $1 million and $5 million. There may be some actions you can take to minimize the impact of the tax hike, including maintaining a residence in another state by buying your retirement home early, deferring income and possibly changing how and where various trusts, IRAs and other accounts are set up.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act: Signed in 2019 and taking effect in 2020, the federal SECURE Act was meant to help people save more aggressively for retirement. There are some significant ways the SECURE Act will impact people who are nearing retirement, including a change to the required minimum distribution start date to age 72 from 70½ and, with the delay, more savings opportunities. However, it changes how and when some retirement and IRA account beneficiaries need to distribute the assets, which could impact their tax benefits.

The Tax Cuts and Jobs Act: While the TCJA passed in 2017, its impact on estate planning is still being absorbed. Existing federal estate and gift tax law only applies to the portion of an estate’s value above the exemption level. The TCJA doubled the exemption to $11.8 million for individuals and $22.36 million for married couples through 2025, with the exemption level indexed for inflation at $11.58 million in 2020 for singles and twice that for married couples. There are ways to leverage your charitable contributions through bundling and other strategic actions to avoid losing tax breaks under the TCJA. Learn more about those methods in “Keep Your Tax Credit for Charitable Gifts.”

Gift Tax: When giving a financial gift, any amount more than $15,000 to a single recipient from one individual in one calendar year must be reported on a gift tax return. If you’re considering a gift to help a loved one with something like education or health care, be aware that there are no reporting requirements for payments made directly to institutions providing those services.

Retirement Planning and Trusts: Most people choose to have their retirement assets, such as IRA’s and other qualified retirement plans, transferred directly to their heirs named as designated beneficiaries on the account.  You may ask if there is any benefit to placing these assets into a trust instead. You can create and use a trust in New Jersey for anything you want to accomplish as long as it does not violate public policy and New Jersey law. There are many different types of trusts that can accomplish many different things, such as tax avoidance plans, providing for a loved one with disabilities or for owners of real estate or businesses, so consulting with a qualified attorney on this subject is very important in order to determine what’s right for you.


The estate planning process shouldn’t be an arduous one. The attorneys at Timothy Rice Estate and Elder Law Firm are here to simplify the process for you. To book a consultation with one of our experienced estate planning and elder law attorneys, contact our office by calling 856.782.8450 or emailing us at [email protected].

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