Discussions around estate planning often begin with taxes and how to avoid paying estate. In reality, only a small percentage of estates are subject to federal estate taxes. The new federal tax law enacted by congress earlier this year greatly reduced the number of estates subject to such taxes by essentially doubling the amount of money that is automatically exempt from federal estate tax – to approximately $11 million or $22 million per married couple.
This change in the tax law, however, does not change the necessity of making an estate plan, even if your estate’s assets are well under these federal exemption amounts. For many people, the most important part of their estate plan involves planning for their financial wellbeing while they are still alive via durable powers of attorney and advanced healthcare directives. After death planning can help you control your assets after death by designating how your assets and any special possessions are distributed to your loved ones, and avoid public and costly probate proceedings in court.
Once you’ve completed and executed your estate plan, don’t neglect all of your work and planning by filing it away for the next decade or more. It is essential to review your estate planning documents periodically to ensure they still reflect your wishes and are able to effectuate them under any new laws that may have been enacted. In particular, it is especially important to review and update your estate planning documents with certain life changes, such as a divorce or marriage; the death of someone named in your estate plan; children turning eighteen; a substantial increase or decrease in the value of your estate; the acquisition (or disposition) of a significant asset; moving to another state; or changes in state or federal law. The passage of time alone is enough to warrant a review of your documents.
If you would like more information about estate planning, creating your own estate plan, or updating or reviewing your plan, please give us a call. We are happy to help give you the peace of mind that comes with good planning.