by: Heinz Brisske
An article in JDSupra Business Advisor caught my eye:
Make a New Year’s Resolution to Review Your Estate Plan in 2015
(https://www.jdsupra.com/legalnews/make-a-new-years-resolution-to-review-y-28424/). It contains advice that we give our clients every year.
Keeping your plan current and viable is as important as creating an estate plan in the first place.
The article lists several “significant” changes in the law that compel a review, and cites other reasons to revisit your plan. A summary follows:
- The federal exemption amount for gift and estate tax purposes for 2015 is $5,430,000 (up from $5,340,000 in 2014). In addition, the introduction of portability a few years ago allows a decedent to transfer any unused gift and estate tax exemption to his or her spouse. These changes provide an opportunity to engage in unique and potentially significant estate and income tax planning.
- Many states have their own, separate estate taxes, which don’t coordinate with the federal estate tax. The estate tax threshold in Illinois, at $4,000,000, is below the federal exclusion amount, and the tax is calculated differently than the federal estate tax.
- The federal gift tax annual exclusion remains at $14,000, thereby allowing a married couple to transfer $28,000 to any number of children, grandchildren, or other donees.
- Legally married same-sex spouses are now afforded the same benefits as opposite-sex spouses.
- Review designation of fiduciaries, such as Trustees, Executors and Agents; are those designations still appropriate?
- The U.S. Supreme Court, In Clark vs. Rameker, held that an inherited IRA is not a retirement account, and therefore is not entitled to protection in bankruptcy. It may be appropriate for you to consider a stand-alone retirement trust for your IRA or 401(k).
The article concludes with the statement: “You probably have put a significant amount of time, energy and emotion into your estate plan.
Therefore, it is important to make sure your plan continues to reflect your goals.”
To the list recited in the article, I would add several others
- Asset ownership is as important and estate planning documentation; does the ownership of your assets coordinate with your written estate planning documents? If not, the plan likely won’t perform as desired.
- Review retirement account (IRA, 401(k), etc.) beneficiary designations. If you have had any major changes in your life, such as a divorce, it is imperative that you confirm that you have the proper people named as your beneficiaries. It is shocking to learn how many retirement accounts have incorrect beneficiary designations or none at all.
- Over the last several years, Illinois has amended its Power of Attorney Act on several occasions. Are you Powers of Attorney current? Do they reflect your current wishes? Do they give your agent all the powers that he or she will need in the event you become unable to make decisions for yourself?
- Illinois has enacted a number of laws of the last couple of years that affect your ability to provide flexibility for your beneficiaries. Is your Revocable Living Trust flexible enough to deal with all the changes that are likely to occur in your life and in the lives of your loved ones over the next several generations?
These are just a few of the issues that we deal with in reviewing estate plans for our clients. Individual situations vary widely, and pose challenges not listed here. We encourage everyone to review their plans regularly, or discuss enrollment in our Family Legacy Plan™ with us.