Offered by Dolan & Associates, P.C.
In December, Congress passed the Tax Cuts and Jobs Act which made significant tax law changes. The changes to the death tax in the Act will not affect most Americans. The Act increases the exemption from paying estate tax to $11.2 million per individual. Any amount over the exemption will continue to be taxed at 40%. However, this provision of the Act will automatically expire in 2026 and can be changed at any time by a future Congress. If you have a larger estate that is below the exemption amount, you should still consider planning now while you are not subject to the tax, in anticipation of a higher tax environment in the future. The death tax has been repealed and reinstated four times in our nation’s history. The significant exemption amounts that began in 2013 changed the landscape regarding how people plan their estates.
Estate plans prepared prior to 2013 often focused on avoiding death taxation. To protect families from death taxes, the plans sacrificed the income tax advantages that individuals gain on death. If you have not updated your estate plan to adjust for the changing tax environment, your old plan may unnecessarily and substantially increase the income tax liability your family will face after your death.
Many families have failed to recognize how these ongoing changes in the legal environment can affect their estate plans. You should be proactive regarding getting your plan updated. Most attorneys do not inform their clients of needed changes after the sale of the original documents. You are responsible for recognizing when changes are needed.
In a constantly changing legal environment, maintaining your estate plan is a critical element to its success. This is the only way to protect your plan’s effectiveness from being eroded by legal, and personal, changes. The documents don’t magically change in your safe deposit box. To produce the best possible result, they need to be updated regularly.
If you would like to learn more about an alternative estate planning process that is producing great results for families, visit: www.EstatePlansThatWork.com to sign up for a free educational workshop.
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