HAVE YOU REVIEWED YOUR ESTATE PLAN IN LIGHT OF RECENT CHANGES IN THE ESTATE TAX LAWS?
If you have not looked at your will, trust, and powers of attorney recently, now is the time to do so. Estate planning documents need to be updated as the laws change and as your family and financial circumstances change.
There have been significant changes with respect to the federal estate tax laws in the recently enacted “Tax Cuts and Jobs Act,” signed on December 22, 2017. These changes mean your current estate planning documents may no longer accomplish your intended goals.
For those who feel they will never be affected by the estate tax in light of the new increase in the exemption amount, there are still many reasons you may need to update your documents.
If you answer “yes” to any of the following questions, then your estate plan should be reviewed:
- Did you change your state of principal residence?
- Did you marry or divorce?
- Did your spouse pass away or become incapacitated?
- Did you have or adopt any children?
- Did any of your beneficiaries marry, divorce, have children, pass away or become incapacitated, or have financial problems?
- Did any of your designated fiduciaries/representatives pass away or become unfit to serve in their designated roles?
- Did you retire?
- Did your financial situation change?
Questions? The Law Office of Debra Simms is here to help. Call us today 386.256.4882
We have had a federal tax on inheritances (the so-called “death tax”) since the Civil War. The modern estate tax has been on the books since 1916, but in 2016 the estate tax brought in only $18 billion, or less than 1% of U.S. tax revenue. Even so, this relatively minor tax became a major battleground during last year’s tax debate.
Many Republicans wanted a permanent repeal of the “death tax,” saying it amounts to double taxation and unfair burden on family-owned businesses and farms. Others say the erosion of the “death tax” is a giveaway to the richest Americans at a time of increasing wealth disparity. Many of those in favor of the death tax see it as the best solution to reduce the trillion dollar national debt that threatens the financial security of future generations. After all, the reasoning goes, the baby boomers will be leaving an unprecedented amount of wealth to their children, why not ask those same lucky souls to pay down the debt?
New Tax Bill:
The tax bill that President Donald Trump signed into law doubled the amount of wealth that escapes the 40 percent estate tax. Starting in 2018, the new law exempts about $11 million for individuals and $22 million for couples (the exact amount depends on the inflation adjustment), but only until 2026, when the thresholds will revert back.
So, will the new tax bill affect your estate plan? Unless you are worth more $11 million ($22 million for a married couple), it will not.
But, for those of you who have older estate plans, created when the tax exemption was much lower, say prior to 2010, you probably want to consider updates to and simplification of your plans.
Questions? The Law Office of Debra Simms is here to help. Call us today with questions. 386.256.4882