By: Barry E. Haimo, Esq.
March 15, 2018
Who Should Revisit Their Estate Plan in 2018
At Haimo Law, we recommend you review your estate planning documents at home on an annual basis. A lot can happen in a year. But when it is worth setting another meeting with your estate planning attorney?
2018 is a unique year because recent changes to the tax code can have a big impact for some people. It may be more likely your estate plan needs an update.
Here are a few situations where people should set an appointment with their estate planning attorney in 2018.
You haven’t revisited your estate plan in 3-5 years.
If you notice a required change in your annual review at home, you need to set an appointment. But what if nothing jumps out at you? It’s still a good idea to set an appointment anyway every 3-5 years. You may not be aware of how tax laws have changed during that time, and factors like portfolio values and your own goals may not be reflected accurately in your current estate plan as well. In addition, your estate planning attorney may ask you questions you may not have anticipated.
You recently went through a major life change.
This includes a birth, adoption, death, marriage, or divorce. Depending on your circumstances, you may need to remove or add a beneficiary or make changes to who you designate as your Executors, Guardians, Trustees, Attorneys-in-fact, and Health Care Agents.
You or a loved one require long-term care – or may in the near future.
Serious health issues can mean a significant expense. You can add provisions to your estate plan to help family members get the care they need. If you are suffering from a health issue, you may want to provide specific instructions to your Trustee about the care you want.
You have retired or plan to in the near future.
If you are planning to withdraw your IRA funds to supplement your income instead of contributing, this can impact your estate plan. You can make changes to make the most of your money for the long-term.
You started a business or made a change to a business you own.
Many companies start out as a Sole Proprietorship or partnership and then later change to an LLC or Corporation. Maybe you recently added a business partner or inherited all or part of a family business. If you have made or are considering significant changes related to your business, your estate planning attorney can walk you through the tax benefits and other pros and cons of various entities and business arrangements, and that can save you and your heirs a lot in the long run.
Your estate went up or down 20% in total value since the last review.
You want to ensure your estate is using the best possible means to reduce or eliminate estate taxes on your death. If you experience a major fluctuation in the value of your estate, your previous plan may not cut it. You’ll need to provide your estate planning attorney with an updated summary of your assets and liabilities.
You bought life insurance.
If you have a new life insurance policy, you may want to consider transferring the ownership of the policy to a life insurance trust. That way, the policy’s value is kept out of your estate. In the case that you already have an irrevocable insurance trust, you need to comply with all annual tax requirements.
You need to retitle new assets into the name of your trust.
To ensure a revocable trust has proper funding, you need to retitle certain assets into the name of your trust. This could include new investment accounts, real estate, life insurance policies, or retirement accounts.
You have moved or plan to move.
Estate planning law varies from state to state, so you want to ensure your current plan will be valid in your new location. You do not need to revisit your estate plan for a move within the same state.
Your estate is valued over $5 million per person or $10 million per couple.
Previously, estate taxes excluded estates valued at $5.49 million per person or $10.98 million per couple. But the 2017 Tax Cuts and Jobs Act doubles this exemption for those who die in 2018 through 2025. This means estates valued at less than $11 million per person or $22 million per couple are not required to pay estate taxes. Your current plan may have bequests based on formulas that are no longer relevant.
You have a pass-through business entity.
Under the new tax code, pass-through businesses benefit from a new 20% income tax deduction. You may be able to maximize the benefits of this change in your estate plan.
Partnership Audit Rules Have Changed
The partnership rules were overhauled in 2017, creating very important changes for businesses. Read more here: New Partnership Audit Rules: Amend Your Partnership Agreements Now.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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