Sometimes there’s very little fanfare when a new law is passed. We don’t know what hit us until the law affects something close to us. While it was on the news a lot recently, tax reform may still be somewhat mysterious to most of us. Tax reform may shape your most important documents – your estate plan. Take a few minutes to see how tax reform will affect your estate plan.
Your Estate Plan Goals.
An estate plan provides instructions for managing a person’s assets during incapacity or transferring them after death. Most people want to leave as much of their property to their heirs as possible. Estate planning documents make it more likely that estate assets will be handled in the most expedient and cost-efficient way.
Changing Directions Due to Tax Reform.
The value of your estate may determine which estate planning tools you use. Some estates need strategies that reduce potential estate taxes.
The 2017 tax reform law doubles the exemption amount for estate taxes from a little over $5 million to more than $11 million per person. For federal estate tax to be assessed, the value of an estate must exceed the exemption amount. The new exemption limit pertains to estates where the decedent died after December 31, 2017.
So, What Now?
Under current tax law provisions regarding estate taxes, which expires in 2025:
- Review your estate plan if its value even approaches the exemption limit. Does it fit with the current tax climate? Can it adapt to future changes in your net worth or in the law?
- It’s very likely that the value of your estate assets will not reach the exemption amount. However, have a qualified attorney review your estate plan. Between now and 2025, the value of your estate increase to the exemption limit.
Remember that your estate will be taxed according to tax law in effect at the time of your death.
Federal tax reform also may trigger changes to any applicable state inheritance and estate taxes. Consult with an attorney or tax professional to confirm your state’s laws on estate and inheritance taxes.
Concerned About the Direction of Your Plan?
If you’re uncertain about how the new tax rules will affect your estate planning, call for a consultation.
At Dillon Law Group, PLC, your estate is in good hands. Our attorneys work with you to make thoughtful decisions about your future. Give us a call at 757-962-4796 or use our convenient Contact Form. We assist clients in the Virginia Beach and Newport News areas.