Why Updating Your Estate Plan Could Be Your Best Income Tax Plan

As an estate planning and tax planning attorney, a common question that I am asked is, "How often should I have my attorney review my estate plan?" or "How has the law changed my estate plan?"

While there are many reasons to have your attorney review your estate plan every few years, it is especially important when there have been significant changes in the law.

Late in 2017, Congress passed the Tax Cuts and Jobs Act of 2017. This was the most comprehensive tax legislation in over 30 years. One of the major tax changes under the law was the doubling of the federal estate tax exemption ($11,400,000 per individual in 2019). As a result of this change, few estates will be subject to the federal estate tax. Likewise, many estate plans with old tax planning provisions, such as bypass trust provisions, are now out-of-date.

So what is the big deal? How bad can an out-of-date bypass Will be? The answers might surprise you.

First, your out-of-date bypass Will may mean that the marital trust for the benefit of your surviving spouse is not funded. This could mean little or no funds for your surviving spouse. Second, you could lose the opportunity for a major tax savings at the second spouse's death due to an asset not being included in the decedent’s estate and receiving a stepped-up tax basis equal to fair market value on date of death.

These are just a few examples of problems with an outdated estate plan; there are several options to update your plan to increase future tax savings as well as ensure your beneficiaries are taken care of.

Make the review process easy, and call me at (205) 789-9894 to discuss what option is right for you!

Richard Burton is a shareholder at Dominick Feld Hyde, P.C. and specializes in Estate & Trust Planning, Probate Administration, Guardianship and Conservatorship, Asset Protection Planning, Business Succession Planning, Federal & State Tax Planning, and Charitable Giving & Private Foundations.

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