Happy New Year 2021

Canarick & Canarick

Happy New Year to you and your family! 

Each year I send an e-mail to my clients to provide updates on any upcoming estate tax law changes, but I would be remiss if I did not take a few moments to reflect on the crazy year that was 2020. For many, the year 2020 has been a turbulent one, coming with many newly found struggles in both work and personal lives. My practice was no different. From trying to run a practice from home, to not being able to meet face to face with my clients, to learning and working with new technologies, this past year has tested me like no other. As I look back on it now, I wanted to say a sincere thank you to all of my clients and centers of influence for the continued trust that they place in me. The success of Canarick & Canarick is based on the relationships we have built over the years, and we really would not be where we are without you. In addition, I would like to thank my staff. My amazing assistant, Katie (who joined me in late 2019), and my incredible associate, Anna (who became the first associate that I brought into the firm since forming it over thirteen years ago), have risen to meet every roadblock, while always looking out for all our clients and colleagues. Completely transitioning the way we do business, while taking on a record number of new clients (and being named one of the Best Attorneys for Families by New Jersey Family Magazine),  was nothing short of amazing.  
With that said, I wanted to provide a few small updates for 2021…

  • For an estate of any decedent dying during calendar year 2021, the applicable exclusion is increased from $11.58 million to $11.7 million. This change increases not only the applicable exclusion amount available at death, but also a taxpayer’s lifetime gift applicable exclusion amount and generation skipping transfer exclusion amount. This means that in 2021, a married couple could transfer up to $23.4 million to their children and grandchildren without the imposition of estate, gift or generation skipping transfer taxes.  As discussed in my last blog post, however, this can all change if President-elect Biden is able to pass new tax legislation. If no new tax law is passed, the increased exclusion amounts are scheduled to expire on December 31, 2025, which would mean a reduction in the exclusion amounts to $5 million (plus adjustments for inflation). I will continue to keep everyone updated on any new tax law that may be passed under the new administration.
  • The estate, gift and GST tax rate remains the same at 40% and the gift tax annual exclusion remains at $15,000.
  • The New York exclusion is scheduled to increase to $5.93 million (up from $5.85 million in 2020), and is scheduled to increase with inflation each year going forward. It is important to note that, unlike the Federal exclusion amount, the New York exclusion amount is not portable. This means that if the first spouse to die fails to utilize his or her full exclusion amount, the surviving spouse will not be able to utilize the first spouse to die’s unused exclusion amount.
  • The New Jersey estate tax was repealed in 2018. It has not yet been reinstated by Governor Murphy. It does not appear that this is an issue that he will address in his first term as Governor, but we will have to see what the future holds. The New Jersey Inheritance Tax has not been repealed and remains in effect. This tax only applies when assets pass to someone other than a spouse, parent, child, grandchild, etc.

As always, please feel free to reach out with any questions or to schedule a review of your estate plan.  
Wishing you and yours a safe, healthy, and prosperous new year! Cheers to a better 2021!

Best regards,

Michael Canarick