Forbes’ recent article, “7 Reasons To Revisit Your Estate Plan, Trump Tax Law Aside,” says that even if one’s estate is unlikely to be subject to federal estate taxes, there still are several non-tax reasons to revisit estate planning and possibly update your prior documents.
The disposition of your assets. Even with a revocable trust in place, a will often serves as the primary means for communicating your wishes. The provisions of a will can state how assets will be transferred, which can include an outright transfer to beneficiaries; to an existing trust (inter vivos trust) or into a new trust that will be created under the provisions of the will (testamentary trust). A testamentary trust in a will can specify the ages of beneficiaries or other terms that determine when beneficiaries will receive assets. Wills also contain specific bequests of financial and nonfinancial assets, like family heirlooms. In addition, charities are often named as recipients of bequests.
Administration and financial management. When a person passes away, an estate is created. The person or institution managing the affairs of the estate is the executor or personal representative, who is tasked with the taking care of the decedent’s assets and liabilities, working with the probate courts, and disposing of the assets in accordance with the will.
Guardianship for children. If an individual has minor or disabled children, the will must designate your choice of a guardian and a successor guardian.
Trusts. Trusts give the creator some level of control over assets and their use through distributions. This can be especially important when leaving assets to those with financial issues, a person with a disability or an addiction, or a financially unsophisticated spouse. Trusts can also shield assets from divorce and the claims of creditors and predators. There are many types of trusts. An experienced estate planning attorney will be able to help you to select the right kind of trust and make sure they are set up correctly.
Other Estate Planning Documents. In addition to the will, an individual should have an advanced health care directive and a general durable power of attorney over financial matters.
Taxes. With “portability,” a vehicle that lets any unused credit from the first spouse to die pass to the surviving spouse to use, your current estate plan should be revisited. Consider state estate tax provisions that do not follow the federal tax, which could result in no federal estate taxes, but still a significant state tax. In California the is no estate tax for estates of all sizes. The federal estate tax limit is now $11,200,000 per person.
Gifting. The ability to make lifetime gifts has also doubled with each person able to gift $15,000 per person annually without incurring a gift tax. After that, you may gift up to $11,200,000 during your life gift tax free. Gifting has many tax savings opportunities. However, it can also create complications from the impact of the gifts on the recipient. Work with an attorney for any sizable gifts.
Even though the new tax law has greatly reduced or eliminated the potential estate tax liability by the doubling of the lifetime estate and gift tax exemption, it hasn’t reduced the need for thoughtful and proactive estate planning.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Forbes (March 15, 2018) “7 Reasons To Revisit Your Estate Plan, Trump Tax Law Aside”