October 18, 2017February 7, 2022

2018 Estate Tax Exemption Projections

The IRS has not yet announced what the 2018 estate tax exemption will be. However, expert analysts think there will be some slightly good news for wealthy people.

They predict that the exemption should increase to $5.6 million for a single person and more than $11 million for married couples.

At the same time, they predict that the annual gift tax exemption should also increase to about $15,000, as Forbes reported in “Estate Tax Exemption To Top $11 Million Per Couple in 2018.”

This should give wealthy people and their estate planning attorneys a little bit more flexibility, as they attempt to shrink estates to below the threshold.

While most people who might be affected by this exemption increase would prefer to see the estate tax repealed entirely, that is increasingly looking like it will not happen this year.

Congress has turned its attention to tax reform, but getting anything passed could be a long process and will likely continue into next year.

Repealing the estate tax is also controversial. If Democratic votes are needed to pass tax reform legislation, that might take the estate tax off the table.

If you have questions about your estate and how it might have an impact on the estate tax, then you should see an experienced estate planning attorney in your area.

Reference: Forbes (Sep. 15, 2017) “Estate Tax Exemption To Top $11 Million Per Couple in 2018.”

October 13, 2017

Cutting a Child Out

Wealthy parents often have extremely high expectations for their children. They want their children to go to school, get a good job, raise a family and do all of the things that made the parents so successful.

However, sometimes a child just does not live up to those expectations.

Sometimes there is a black sheep who does everything the parents would not want him or her to do.

If the problems are severe enough, then the parents might even stop contact with the child and seek to cut him or her out of their estates.

The latter is often a bad idea, as the Globe and Mail discusses in "Think twice, wealthy family, before cutting the black sheep out of your will."
One big thing to consider is that a child who receives nothing has no incentive to not cause problems.

A no-contest clause can prevent someone who does receive an inheritance from challenging an estate plan that they do not like, but it cannot prevent someone from doing so who is set to receive nothing or very little from an estate.

This can make cutting a child out of an estate plan a very expensive proposition. This is because the child has no reason to not launch legal fights.

A black sheep child can also be more easily controlled by using an estate plan to incentivize that child into desired behaviors.

An estate planning attorney can help you create a trust, for example, that only distributes money to the child when certain actions are taken by the child.

Reference: Globe and Mail (Sep. 19, 2017) "Think twice, wealthy family, before cutting the black sheep out of your will."

October 12, 2017

Same-Sex Couples Estate Planning

When the Supreme Court ruled that same-sex couples have a Constitutional right to get married, many problems those couples faced were finally resolved. For the first time, gay couples had legal protections in case one of them passed away.

The laws of intestate succession would protect them, in case they did not have an estate plan.

Couples were also given more rights to information about the health of the other, so they could assist in the treatment plan if one or the other of them got seriously ill.

However, not all potential estate planning issues for same-sex couples are fully resolved, as Cleveland Jewish News discusses in "Same-sex couples could face estate planning road blocks."

One of the biggest problems remains child custody.

Prior to legalizing same-sex marriage, it was not normally allowed for both partners in a same-sex relationship to be put on the birth certificate of a newborn.

This has important implications for any children born prior to the Supreme Court's decision.

The automatic right of custody of children in the event the spouse whose name is on the birth certificate passes away, cannot be assumed for the other spouse.

Of course, this is an ever bigger problem for same-sex couples who have chosen not to get married. They still have all of the other potential issues that existed previously.

It is extremely important that same-sex couples see an estate planning attorney.

The law is more favorable than it used to be, but it is not yet perfect at protecting their rights.

Reference: Cleveland Jewish News (Sep. 9, 2017) "Same-sex couples could face estate planning road blocks."

October 11, 2017

Estate Tax Repeal Could Hurt Charities

At first glance, it might not seem like there is much of a relationship between the existence of the estate tax and charities.

The former takes money from the wealthiest estates involuntarily and uses it to help fund government programs. The latter are entities that people voluntarily give money to, in support of causes that they think benefit society.

However, the two are very much related, as Bloomberg discusses in "GOP Plan to Kill Estate Tax Sets Up Charitable Giving Conflict."

The issue is that one of the most common ways to get around the estate tax is to shrink an estate to just below the estate tax exemption limit. A great way to do this is to give money to charity.

When the estate tax was temporarily eliminated in 2010, charitable giving was reduced by 37%.

This has many charities very nervous about the possibility that the estate tax could be eliminated again, as the Trump administration and Congressional Republicans would like.

Republicans are looking for ways to get around this problem by finding other ways to encourage
charitable giving.

It is not yet certain whether they will have the votes necessary to do that.

It is also not certain at this point whether they will have the votes to eliminate the estate tax either.

Reference: Bloomberg (Aug. 25, 2017) "GOP Plan to Kill Estate Tax Sets Up Charitable Giving Conflict."

October 10, 2017

Estate Planning Is Ongoing Process

It is not enough to get an estate plan once and leave it alone for all time. It needs to be constantly reviewed and updated to take account of changing circumstances.

Some people can get away with getting an estate plan once and never looking at it again. If someone never gets divorced, remarried, has more children or increases assets, then the first estate plan they get might be good enough for the rest of their lives.

This is true, even if that estate plan was written 50 years before the person passes away.

However, most people's lives are not that constant.

In fact, most people have significant changes in their lives as they get older.

When things change, then estate plans normally need to be changed as well, as Forbes discusses in "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

The more wealth that you have, the more often you will probably need to change your estate plan.

This is because your assets will grow, how you hold those assets will change and tax laws will also change.

Nevertheless, it is not just the wealthy who need to constantly review and update their estate plans.

Everyone should do so, whenever there is a significant change in their lives that should be reflected in an estate plan.

Examples of these changes include divorce, remarriage, a new child, a new higher paying job, a new grandchild and much more.

If you have not changed your estate plan recently, then take a look at it.

Ask yourself whether it still does what you want it to do, given all the changes in your life.

If the answer is no or even maybe not, then talk to an estate planning attorney.

Reference: Forbes (Sep. 6, 2017) "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

October 10, 2017

Estate Planning Is Ongoing Process

It is not enough to get an estate plan once and leave it alone for all time. It needs to be constantly reviewed and updated to take account of changing circumstances.

This is true, even if that estate plan was written 50 years before the person passes away.

However, most people's lives are not that constant.

In fact, most people have significant changes in their lives as they get older.

When things change, then estate plans normally need to be changed as well, as Forbes discusses in "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

The more wealth that you have, the more often you will probably need to change your estate plan.

This is because your assets will grow, how you hold those assets will change and tax laws will also change.

Nevertheless, it is not just the wealthy who need to constantly review and update their estate plans.

Everyone should do so, whenever there is a significant change in their lives that should be reflected in an estate plan.

Examples of these changes include divorce, remarriage, a new child, a new higher paying job, a new grandchild and much more.

If you have not changed your estate plan recently, then take a look at it.

Ask yourself whether it still does what you want it to do, given all the changes in your life.

If the answer is no or even maybe not, then talk to an estate planning attorney.

Reference: Forbes (Sep. 6, 2017) "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

October 2, 2017

Electronic Wills are around the Corner

Almost all business can now be conducted electronically. Wills are one of the last holdouts, but that is starting to change.
Traditionally, for a will to be accepted as valid in probate court, it had to follow very strict forms and procedures. It needed to be signed and there needed to be witnesses present who could testify that the will was signed. Normally, two witnesses were needed.

Eventually, some states relaxed the strict formalities and allowed other wills to be probated, if it could be proven that the contents of the will were the intentions of the testator. However, some states kept the very strict rules.

That makes it difficult for wills to be made digitally, like most everything else can be today.
The law is now beginning to adapt in ways that will make them possible, as the New Jersey Law Journal discusses in "Electronic Wills: No Longer in A Galaxy Far, Far Away."

In 2013, an electronic will was accepted into probate in Ohio. In that case, the person had digitally signed the will using a stylus and witnesses were present to the signing.

While Florida recently rejected an electronic wills law, Nevada has passed a law that allows them.
In other states, courts are rewriting the rules to allow more non-conforming wills to be accepted, which will eventually pave the way for electronic wills in those states.

For now, you probably do still need to make sure that your will is written on paper and that all of the formal procedures are followed correctly.
That might not be true in a decade.

Reference: New Jersey Law Journal (Sep. 11, 2017) "Electronic Wills: No Longer in A Galaxy Far, Far Away."

Building Legacies that Last Estate Planning and Elder Law

Month: October 2017

2018 Estate Tax Exemption Projections

Cutting a Child Out

Same-Sex Couples Estate Planning

Estate Tax Repeal Could Hurt Charities

Estate Planning Is Ongoing Process

Estate Planning Is Ongoing Process

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