If you have created a high net-worth estate you should consider the tax implications of how you divide your estate. New York also has certain laws to follow that determine if your will is valid.
New York law
Laws change over time, so you should be sure that all information is current. Look over your estate plan every year or so to ensure it’s still up to date. When you create an estate plan, with a Will and/or trusts, they must be properly executed and witnessed or notarized as required by New York law. Only members of the armed forces can create oral or holographic (handwritten) wills during combat. These types of wills are otherwise invalid in New York. You must also be at least 18 years old and of sound mind and memory to create an estate plan.
Minimization of taxes
You could save a lot of money by considering how to reduce taxes during your estate planning. Once you know what the possible tax implications are and how they affect you as a high-net-worth individual, you can put together a plan that reduces your taxes. Trusts and gifts are two estate planning strategies that may be helpful for high-net-worth individuals if the method meets all criteria. Setting up trusts may also reduce how much time and money your family will spend on probate..
Some types of trusts make charitable contributions from part of the included assets to provide additional money-saving benefits. Exemption limits for gifts often change year by year. In 2022, individuals could gift up to $12.06 million before needing to pay gift taxes, which can save, and the first $16,000 per year person is exempt from gift taxes. Married couples have a limit of double this amount. If you exceed it, then you may have to pay 40% of the extra in taxes.
Choosing trustworthy trustees, agents under powers of attorney and executors of estates is essential to a good estate plan. You should also designate backup nominees in case your chosen person is no longer able to serve after your death.
As a high net-worth individual, you should know if the size of your estate will subject it to estate taxes. There are ways of distributing it to reduce your tax burden. You should also carefully choose who’s responsible for managing and distributing your estate.