People who are smart know better than to start spending any money they inherit as soon as a family member passes away. In fact, you shouldn’t even plan on taking out a loan with the idea of using that money when you receive it to pay it off, mostly because it could be some time before you’ll even know how much you’ve inherited.
Before any of the beneficiaries can inherit, creditors can come forward and providing they can prove that the deceased was indebted to them, they can take whatever was owed from the estate. Until this happens, no one inherits.
The second thing that influences how much you will get is both Federal and New York City inheritance taxes, which are often referred to as death taxes. Most people think that the only people who have to worry about Federal and New York City inheritance taxes are the extremely wealthy, but that’s not really the case at all. Many beneficiaries are shocked when they learn that yes, they do have to pay inheritance taxes before they can claim their portion of the estate. These inheritance taxes can be 45% of the real estate value.
The good news is that the government did recently increase the exemption rate which is currently at about $200,000,000. Since you know your loved one didn’t have that much money, you probably think you still don’t have to worry about paying inheritance taxes. What few people fully grasp is that there’s a loophole in the exemption. In many large metropolitan areas, including New York City, property values are quite high. If you’re loved one owned any property at all, even a small vacant lot, it could be worth a lot more than you realize. Since property values keep going up at an alarming rate, the property value might even be higher than your loved one expected This means that instead of a nice amount of money you thought you’d be inheriting, you’re actually going to pay nearly all of it in New York City inheritance taxes.
The good news is that there are some things that anyone who is worried about making sure their loved ones will be okay after they’ve departed that will help ease the sting of New York City inheritance taxes.
If you’re married and want to make sure your kids don’t get hit with a huge inheritance tax bill, you need to consult with a probate lawyer and set up a trust for married couples. Once an estate lawyer has helped you set up this trust one of the inheritance tax you won’t have to worry about losing of the exemptions when one spouse passes before the other.
Having the marital trust protects the estate up to $4 million dollars, which can be the difference between the beneficiaries actually collecting an inheritance as opposed to using everything they should have inherited to pay taxes. Once you’ve established a living trust for married couples, if one half of the unit dies before the other, their half of the house remains available to the survivor.
If you need assistance with New York inheritance taxes, contact the experienced estate attorneys at Pulvers-Thompson for help. We will walk you through these sensitive matters and help insure your rights are protected while you also handle your legal responsibilities in regards to inheritance taxes.