The simple fact is that many New Jersey couples will never have to worry about federal estate taxes. This is because the federal estate tax exemption is $5.34 million per person, and a marital exemption from estate tax exists. For this reason, many couples’ estate planning does not necessarily need to focus on avoiding these taxes.
The estate plans of most couples across the county, including many here in New Jersey, will sufficiently reduce or even eliminate the need to pay federal estate taxes. Therefore, the focus can be shifted to other priorities. For instance, if the family owns a business, how that business will be treated in death could take precedence over taxes.
One of the things that decreases inheritances from business owners is the time it takes to distribute assets after death. Without proper planning, the needs of the business can quickly deplete any cash reserves that were meant to be distributed to heirs. This can especially be true if the business centered around the owner, and that person’s death or incapacitation will devastate the business.
Further, without proper planning, the business could end up in the hands of a family member who was never intended to be a part of it. Making contingencies to put the business in the hands of a trusted family member could mean the difference between the business surviving the owner or it dying shortly afterward. Putting the focus of most estate planning needs on the survival of the business and preserving assets after death could ensure that heirs and beneficiaries have the chance to inherit them.
Source: Forbes, “Worry About Your Estate Plan, Not The Taxes“, Steve Parrish, July 1, 2014