Estate planning is critical to ensuring your legacy and wishes are respected. Choosing the right estate planning attorney is essential to this process. This article provides tips for selecting an attorney to serve your needs best and guide you through crafting a comprehensive estate plan.
Wealth Advisor recently published an article—“Tune-Up Your Estate Plan in Light of Changing Conditions”—that asks if your estate plan is still appropriate, in light of several changes in the law. An estate attorney can hep you figure this out. An estate attorney can see if law changes will impact your estate plan.
The federal estate tax gift and estate tax exemption amount is now $11.4 million, indexed for inflation, which is an all-time high. A married couple can transfer twice that amount to children or others, or $22.8 million, without any federal gift and estate tax. The federal exemption amount is also now “portable” between spouses. It means that the first spouse to die, can transfer any unused exemption to the surviving spouse, without the need of a “credit shelter trust.”
Note that the enhanced federal exemption amount is scheduled to “sunset” in 2026, returning back down to $5.6 million (indexed for inflation).
As far as state law changes, the New York estate tax exemption amount is $5.74 million. However, that exemption isn’t portable. The estate tax exemption is also phased out, if your taxable estate is 5% more than that amount. For a New York taxable estate of about $6 million, there’s no exemption and the New York estate tax is about $500,000. The New York estate tax on a $10 million taxable estate is more than $1 million. Since New York has no gift tax, lifetime gifts don’t decrease the estate tax exemption for state tax purposes. However, gifts made within three years of death, would be clawed back under a pending bill.
In New Jersey, they’ve repealed the estate tax but kept the inheritance tax. Connecticut raised its estate and gift tax exemption amount. In the state of Illinois, the estate tax exemption amount is only $4 million and isn’t portable. This makes flexibility in your estate plan very desirable. For residents in the Land of Lincoln (that’s Illinois), the estate tax savings are less dramatic, since the exemption is smaller than in New York, but the potential savings through proper planning are still major.
Another consideration to note includes the fact that surrogate’s courts and probate courts—which have always moved at a snail’s pace—have become even slower.
Some of these changes may impact your current estate plan. You may want to take advantage of the enhanced federal exemption amount, before it goes away.
Talk to an experienced estate planning attorney to see how you can shelter your savings from a state estate tax, if you are married and live in a state with an estate tax like New York, Connecticut, or Illinois. This could save you a lot of money that you can then pass on to your heirs.
Learn more about the benefits of talking with your estate planning attorney on a periodic basis.
Reference: The Wealth Advisor (June 17, 2019) “Tune-Up Your Estate Plan in Light of Changing Conditions”