WITH the federal tax on estates now kicking in at $5.25 million – or $10.5 million for a couple – it may seem that only the very wealthy need to worry about paying the tax. But that doesn’t mean that everyone else can forget about an estate plan.
We all are familiar with the annual family ritual known as “spring cleaning.” With the changes in the estate tax laws, this may be a good time for some “spring estate plan cleanup.”
Estate planning is an ongoing process, not a one-time event. Not only are there changes in tax laws, but your life and the lives of your loved ones are in a constant change of flux as you move through life together. Accordingly, keeping your estate plan up with life changes requires action, not complacency.
This message was brought home in a recent article by The New York Times titled “Estate Planning Remains a Moving Target Under the New Tax Law.” The article notes that new tax law makes the estate tax a far less likely threat to the life’s work of many Americans. In fact, the “permanent” nature of this most recent iteration of the tax law allows individuals to exempt $5.25 million from taxation (doubled to $10.5 for married couples). Even better, the exemption is set to index for inflation.
All that noted, no changes to the estate tax or any other transfer tax will change the necessity for responsible adult Americans to make sure their estate plans are current. For example, wills, trusts, beneficiary designations and even medical directives should be reviewed periodically.
As suggested in the original article, now is a great time to do some spring cleaning. It’s a chance to review what you have done, make any needed changes and perhaps tie up some loose ends.