Estate Tax Planning

Planning Today to Reduce Taxes Tomorrow

While most individuals do not currently face an estate tax liability, higher-net-worth families often do—and for them, estate tax planning can be one of the most impactful components of a comprehensive financial plan.

At the federal level, the estate tax exemption is relatively high—approximately $15,000,000 per individual, or $30,000,000 for a married couple. This means federal estate taxes generally do not apply until assets exceed these levels.

However, estate tax planning becomes significantly more complex at the state level, where exemption amounts and rules vary widely. For many families, state estate taxes—not federal—pose the greater planning challenge.

Understanding State Estate Tax Rules

Each state has its own estate tax laws:

• Some states offer exemption amounts similar to federal limits

• Others have much lower exemption thresholds

• Some states offer no estate tax exemption at all

For example, New York State currently has an estate tax exemption of approximately $7.1 million, which is less than half of the federal exemption. This means New York residents can face estate taxes at asset levels well below federal thresholds.

Because estate taxes are determined by the state in which you are domiciled, understanding and planning around state-specific rules is critical.

Portability: Federal vs. State Rules

Portability allows a surviving spouse to use the unused estate tax exemption of a deceased spouse.

• Federal estate tax rules allow portability

• Many states do not, including New York

This creates a potential planning problem.

If assets are titled jointly and the first spouse passes away:

• There may be little or no estate in the deceased spouse’s name

• Their state estate tax exemption may go unused

• The surviving spouse may only have one state exemption available

In New York, this could mean losing access to the first spouse’s $7.1 million exemption, increasing the eventual estate tax liability.

Proper estate planning ensures that both spouses’ exemptions are fully utilized, often through asset titling strategies and trust planning.

Asset Titling, Trusts, and Gifting Strategies

Estate tax planning is not just about total asset value—it’s about how assets are structured and titled.

Common strategies include:

• Separating ownership between spouses

• Using credit shelter or bypass trusts

• Implementing lifetime gifting strategies

• Using irrevocable trusts to remove assets from the estate

• Planning for future asset growth

For married couples, the way assets are titled can significantly impact estate tax exposure.

Planning for Liquidity to Pay Estate Taxes

Estate taxes are typically due shortly after death, and families often face a challenge when estates consist primarily of:

• Real estate

• Closely held businesses

• Illiquid investment assets

Liquidating these assets quickly can be difficult and may force sales at unfavorable values.

To address this risk, families often use an Irrevocable Life Insurance Trust (ILIT):

• The life insurance policy is removed from the taxable estate

• Death benefit proceeds can be used to pay estate taxes

• Heirs are not forced to sell valuable assets to cover tax obligations

ILITs are a common solution for estates with liquidity concerns.

Estate Growth and Future Tax Exposure

Even families that do not currently face an estate tax issue may have one in the future.

Considerations include:

• Asset growth over time

• Business appreciation

• Real estate value increases

• Investment returns

• Inheritance from parents or relatives

An estate that is below exemption limits today may exceed them in the future, making early planning essential.

The Impact of Changing Tax Laws

Estate tax laws are subject to change.

Future legislation could:

• Reduce federal or state exemption amounts

• Alter portability rules

• Change how inherited assets are taxed

• Modify trust planning strategies

Because of this, estate plans should not be “set it and forget it.” Reviewing an estate plan after major tax law changes—or if it has not been reviewed in several years—is a prudent step for higher-net-worth families.

Our Approach to Estate Tax Planning

At Greenbush Financial Group, estate tax planning is integrated into the broader financial plan. We help clients:

• Identify potential federal and state estate tax exposure

• Coordinate asset titling and trust strategies

• Evaluate gifting and lifetime planning options

• Plan for estate liquidity

• Work closely with estate attorneys and tax professionals

• Adjust strategies as laws and circumstances evolve

The goal is not just to reduce taxes—but to do so in a way that aligns with family goals, values, and legacy intentions.

Contact Us . . . .

All of our services start with a complimentary consult. No high pressure sales tactics. We are financial planners, not salesmen.

About Our Firm:  Greenbush Financial Group is an independent registered investment advisory firm based in Albany, New York, that provides four main services to clients: fee-based financial planning services, investment management, employer-sponsored retirement plans, and retirement planning services.  The firm serves clients locally in the Albany region and virtually across the United States.

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