Connecticut is home to many high-net-worth individuals. Plenty of people commute into New York for finance jobs or work as insurance industry executives in cities like Hartford. Earning a good living removes many of life’s challenges, but it also creates others. There are some tax-related challenges that affect wealth, especially after death. Properly planning an estate can reduce tax liability and make things easier on those left behind.
Understanding the issues
Connecticut has a state-level estate tax. In 2021, the federal estate tax burden is low, but that may change with the new presidential administration. It’s important for high-net-worth individuals to plan effectively so that their loved ones can access the funds they leave behind.
One way of doing this is via trusts. Another is by learning the current gift-giving limits and distributing money to people in the present. For example, it’s currently possible to transfer over $11 million to someone without it being taxed. However, that’s a lifetime limit; people who have already given $5 million in gifts can give just $6 million more before it affects their tax liability.
Getting help from professionals
Help from professionals like financial planners, attorneys and accountants is crucial when developing tax reduction strategies. Individuals should make sure to look for a financial planner who is a fiduciary. This person must put their clients’ best interest ahead of their own.
Attorneys with experience in this kind of estate planning may also assist in ensuring that people of high net worth can pass on their assets as intended without being burdened by excessive tax obligations. Individuals who have questions about how to do this may want to seek assistance from an estate law attorney.