Your estate plan requires updating every few years because your life changes, but when a big tax law change occurs, it’s time to set up an appointment with your estate planning attorney.
You likely have some questions about how the new tax law may impact your estate plan, but a helpful article from Forbes, “5 Questions To Ask Your Estate Planner After The New Tax Law,” defines some further questions and will be helpful for your conversation with your estate planning attorney.
First, be sure your estate plan is up-to-date. Even if it won’t be affected by the new tax law, you should talk with your attorney to be certain your current wishes are reflected in your estate planning documents.
When you meet with your attorney, you might ask some questions to be sure that your plan still fully supports your interests and those of your heirs. Here are a few:
Will the new federal law affect my estate tax picture? The federal government exempts a certain amount of an estate’s value from this tax. Congress just doubled this exemption to more than $11 million per person.
Will the new law impact my state estate tax? There are 15 states that still have some form of estate tax: Minnesota, Iowa, Nebraska, Washington, Oregon, Kentucky, Tennessee, Pennsylvania, New Jersey, Massachusetts, Rhode Island, Connecticut, Delaware, Maryland, and DC. Some of these states’ exemption limits mirror the federal limits, so the federal increase will automatically trigger the same increase in those states. However, others don’t, and their exemption limits will remain the same.
Are my estate documents tailored to fulfill my wishes and avoid unintended consequences? Results that conflict with your intentions can occur when documents aren’t specific enough. This isn’t uncommon with financial powers of attorney (POA), which instructs your agent(s) on how your finances are to be managed, if you’re incapacitated and unable to make decisions. Without specific provisions to assure your wishes are executed, vague or overly general POAs could permit the agent managing these finances (often, a spouse) to do as they wish, rather than abiding by your instructions. To prevent negative outcomes, ask your estate planning attorney to be certain that your POA is sufficiently specific.
How often should I have my estate plan reviewed? You’ll want an estate plan review after major life events, like marriage, divorce, death, the birth of a child, the sale of a business, retirement, or any major changes. Remember that your estate plan is like your home: it needs to be maintained so that it can withstand the elements.
Reference: Forbes (January 9, 2018) “5 Questions To Ask Your Estate Planner After The New Tax Law”